The speaker of South Korea’s National Assembly has officially signed and delivered the impeachment motion against President Yoon Suk Yeol to the Constitutional Court.
The historic decision marks the third time an impeachment motion has been approved by the nation’s parliament.
The Constitutional Court now has up to 180 days to deliver a final ruling.
Should the court uphold the impeachment, President Yoon will be removed from office, triggering a presidential election within 60 days.
Economic ministers prepare for potential fallout
In light of the political turmoil, South Korea’s Finance Ministry has announced an emergency meeting of economic ministers on Sunday afternoon.
Finance Minister Choi Sang-mok is set to discuss the potential economic and financial implications with Bank of Korea Governor Rhee Chang-yong and other senior officials.
The discussions are expected to focus on stabilizing markets and addressing concerns about economic volatility, which often accompanies significant political upheaval.
Impact on financial markets: Lessons from past impeachments
South Korea’s stock market, represented by the Kospi index, has historically been sensitive to impeachment proceedings.
In the two prior cases—President Roh Moo-hyun in 2004 and President Park Geun-hye in 2016—the market showed contrasting reactions.
- In President Roh’s case, the Kospi initially rebounded after the parliamentary vote but subsequently dropped more than 20% following the court’s decision to overturn the impeachment.
- During President Park’s impeachment, the market initially displayed volatility but rallied more than 20% in the six months after the impeachment was upheld.
Analysts attribute these divergent responses to varying macroeconomic conditions and policy expectations during the respective periods.
A recent report by Goldman Sachs highlighted the volatility leading up to the parliamentary vote but emphasized the Kospi’s eventual recovery in both cases.
The current situation could follow a similar trajectory, depending on the court’s ruling and the policy direction of a potential new administration.
Political uncertainty and broader implications
The impeachment has sparked mixed reactions domestically and internationally, raising questions about the impact on South Korea’s political stability and economic trajectory.
For South Korea, a nation heavily reliant on exports and foreign investment, maintaining investor confidence during this period of uncertainty will be crucial.
Policymakers are expected to focus on minimizing disruptions to financial markets and ensuring steady economic growth amid the political turmoil.
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