The Speaker of the National Assembly in South Korea has signed the motion to impeach President Yoon Suk Yeol and handed it over to the Constitutional Court.
This is the third time that a motion of impeachment has been passed by the national parliament.
Now, the Constitutional Court has 180 days in which to render a decision.
If the court finds the President Yoon guilty of impeachment, then he will be removed and a new presidential election must take place within 60 days.
Prepare for possible fallout: Economic Ministers
The South Korean Finance Ministry announced that an urgent meeting of its economic ministers would be held on Sunday, due to the current political unrest.
Choi Sangmok, Finance Minister of Korea, will discuss potential economic and financial consequences with Bank of Korea governor Rhee Chan-yong as well as other senior officials.
Discussions are likely to be centered on stabilizing the markets, and dealing with concerns over economic volatility that often accompany significant political changes.
Impeachment and its impact on the financial markets
The Kospi Index, which represents the South Korean stock market, is historically sensitive to impeachment procedures.
The market’s reaction was different in the previous two cases – President Roh Moohyun of 2004 and Park Geun Hye, president of 2016.
- The Kospi rose initially after the vote in the parliament, but then dropped by more than 20 percent following the decision of the Supreme Court to reverse the impeachment.
- The market was initially volatile during the impeachment of President Park, but it rallied by more than 20 percent in six months following the ruling.
Analysts attribute the divergent reactions to different macroeconomic conditions as well as policy expectations in each period.
Goldman Sachs’ recent report highlighted volatility in the Kospi leading up to the election but also emphasized its eventual recovery.
The present situation may follow a similar path, depending on the ruling of the court and the direction taken by a new administration.
The implications of political uncertainty
This impeachment sparked a mixed reaction both domestically and abroad, and raised questions regarding the effect on South Korea’s economic and political trajectory.
Maintaining investor confidence in this uncertain period will be critical for South Korea. The nation is heavily dependent on foreign investments and exports.
The focus of policymakers is expected to be on stabilizing economic growth and minimising disruptions in financial markets amid political turmoil.
The post South Korea impeached President Yoon, Finance Ministry calls an emergency meeting can be updated as new information becomes available
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