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Downside risks to the South Korean growth exist, following impeachment of President Park Guen-hye by the National Assembly on Friday. The country’s lawmakers have voted to impeach President Park from her executive powers on Friday. Her duties will be suspended with immediate effect, with the Prime Minister taking over in the interim.
The Court will now decide if she will be permanently removed from her position. A ruling could take up to six months. If approved, fresh elections will have to be called within two months, which means by August at the latest.
Her temporary suspension prevents the ongoing political crisis from deepening further in the near-term. Nevertheless, the lack of a clear leadership could complicate the ongoing government efforts to contain the fallout from production halts in its largest smartphone producer and restructuring in the shipping sectors.
"We see downside risks to our growth forecast of 2.9 percent for 2017," Commerzbank commented in its latest research report.
