Navigating Turbulence: South Korea’s Acting President Han Duck-soo and the Economic Crossroads

South Korea’s political landscape has been thrown into chaos in 2025, with former President Yoon Suk-yeol’s impeachment and removal from office leaving the nation in search of stability. At the helm now is Han Duck-soo, the country’s third acting president since December 2024, whose background as a career civil servant and economist has positioned him to confront both immediate crises and long-term structural challenges.

Political Turmoil and Leadership Uncertainty

Han Duck-soo assumed the role of acting president in April 2025 after the Constitutional Court upheld Yoon’s impeachment, which stemmed from charges of abuse of authority and insurrection. Yoon’s brief imposition of martial law in December 2024—a move that lasted just six hours—had already eroded public trust, and his subsequent conviction on additional charges has deepened the political crisis. Han’s tenure has been marked by urgency: he resigned on May 1 to run in the upcoming June 3 snap election, leaving Deputy Prime Minister Choi Sang-mok as the third acting president.

Han’s candidacy introduces further volatility. As a pragmatic centrist with 40 years of bureaucratic experience, he aims to unite the fractured conservative People Power Party (PPP) against the liberal Democratic Party’s frontrunner, Lee Jae-myung. Yet Lee’s eligibility remains in doubt after the Supreme Court reversed an earlier ruling in his favor, adding legal uncertainty to the race.

Economic Crossroads: Trade Wars and Structural Weaknesses

The economic stakes are high. South Korea’s export-dependent economy faces dual threats: U.S. trade pressures and domestic stagnation. New U.S. tariffs targeting semiconductors and automobiles—key pillars of South Korea’s economy—threaten to disrupt supply chains. Han’s government has proposed a dual strategy: increasing imports of U.S. energy and agricultural goods to balance trade, while incentivizing local production of exports within the U.S.

Domestically, consumer confidence is at a multi-year low. Retailers like Homeplus and Balaan have filed for bankruptcy, while Hyundai Duty Free has shuttered branches. The won has stabilized near 1,434 KRW/USD after earlier weakness, but private-sector investment in emerging sectors like AI has stalled amid policy uncertainty.

Investment Opportunities in Uncertain Times

Despite the turbulence, South Korea’s economy retains strategic strengths. The AI sector, in particular, offers promise. Yoon’s administration had allocated KRW 15 trillion to AI initiatives, but Han and Lee have both pledged even larger investments—up to KRW 100 trillion (~$71 billion) under Lee’s plan—to boost semiconductors, green energy, and domestic demand.

Investors should monitor sectors tied to these priorities:
1. Semiconductors and AI: Companies like Samsung and SK Hynix dominate global memory chip markets.
2. Green Energy: South Korea’s push to reduce carbon emissions by 40% by 2030 could drive demand for renewable infrastructure.
3. Consumer Staples: Defensive plays in food and healthcare may outperform as disposable income remains under pressure.

Risks and the Path Forward

The June election’s outcome will be decisive. A Lee Jae-myung victory could stabilize governance but faces hurdles if his legal troubles persist. Conversely, a PPP win would likely prolong gridlock. Meanwhile, U.S.-South Korea trade negotiations are critical: if tariffs on semiconductors escalate, the KOSPI could drop further, as seen in 2023 when tech-heavy indices fell 12% on similar fears.

Conclusion: A Fragile Equilibrium

South Korea’s economy is at a crossroads. While Han’s interim leadership has prioritized stabilizing markets and preparing for the election, the path to sustained growth hinges on resolving trade disputes, restoring consumer confidence, and executing AI-driven reforms. Historical data underscores the stakes: the KOSPI has historically underperformed during leadership transitions, falling 8% on average in the six months following impeachments since 1995.

Yet the potential rewards are substantial. With AI investment commitments rivaling those of the EU and the U.S., South Korea’s tech ecosystem could emerge stronger if political stability returns. Investors should pair caution with a long-term view: allocate to defensive sectors while watching for policy clarity post-election. The next few months will determine whether South Korea’s “third acting president” era becomes a chapter of reinvention—or a cautionary tale of missed opportunities.