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South Korea has announced its largest-ever trade financing package of 360 trillion won (£245 billion) to support exports in response to an anticipated slowdown in its vital semiconductor sector.
The unprecedented measure, unveiled on Thursday as part of the government’s 2025 Economic Policy Direction, comes as Asia’s fourth-largest economy braces for tepid export growth of just 1.5% this year, down sharply from 8.2% in 2024.
The government has earmarked 95 trillion won specifically to help Korean firms secure large-scale overseas orders through 2028.
The semiconductor industry, which accounted for 20.8% of total exports in 2024, will receive particular attention.
The government plans to increase investment tax credits and provide 14 trillion won in low-interest financing to chip makers. It will also shoulder more than half the costs of infrastructure development in the planned Yongin-Pyeongtaek semiconductor cluster, set to become part of the world’s largest chip manufacturing hub.
To reduce its dependence on major markets, Seoul is expanding its global logistics network. New joint logistics centres will be established in Eastern Europe and additional US locations, complementing existing facilities in the Netherlands, Spain, Indonesia, and the US West Coast.
Seoul is particularly concerned about intensifying competition in key industries and potential disruptions from shifts in US trade policy, particularly under the US Inflation Reduction Act following Donald Trump’s return to presidential office.
The comprehensive package includes extended tax relief for small and medium-sized exporters, including postponed corporate tax payments and expedited VAT refunds. The government will also increase support for emerging sectors such as electric vehicles, with plans to expand charging infrastructure significantly by year-end.
This intervention is evidently designed to protect the country’s export-driven economy, which relies on overseas shipments for nearly 40% of its GDP.
South Korea is grappling with the aftermath of suspended president Yoon Suk Yeol’s shortlived declaration of martial law in the country on 3 December; the dramatic move sent shockwaves through financial markets, dampened business confidence, and hampered the nation’s diplomatic initiatives.
