A BOK official suggests that Trump tariffs pose a greater threat to South Korea's economy than domestic political chaos.

• The recent political turmoil in South Korea poses a threat to its economy, but its impact is expected to decrease in the next six months, according to BOK official Soohyung Lee.
• The biggest threat to South Korea's economy in 2025 is the possibility of U.S. President-elect Donald Trump's import tariffs being implemented.
• Based on the country's strong economy over the past 20 years, Lee is "cautiously optimistic" about economic conditions.

The Bank of Korea official stated that while the risks posed by South Korea's political turmoil to its economy may subside within half a year, external pressures such as possible tariffs on the country's exports to the U.S. are "troublesome."

"According to Soohyung Lee, a member of the Monetary Policy Board at the Bank of Korea, who spoke on CNBC's "Squawk Box Asia" on Thursday, there have been two presidential impeachments in the past, and for both cases, the political turmoil or uncertainties have subsided within three to six months."

Lee stated that while the political turmoil may not significantly affect the country's economy, the potential negative consequences of external factors are more concerning.

The proposed tariffs by U.S. President-elect Donald Trump create pressure, perceived or real, for export-oriented countries, including South Korea, according to Lee.

The reintroduction of inflationary forces in the U.S. economy due to tariffs on South Korea's exports could lead to high U.S. interest rates and a strong dollar, which would affect the Korean won.

If the Chinese yuan depreciates, it could weaken the South Korean won even more, potentially increasing financial market volatility, acknowledged Lee.

The won reached a 15-year low against the U.S. dollar in December 2024, and was last trading at 1,466.48.

Although the BOK possesses policy instruments such as "foreign reserves and collaboration with government departments like the Ministry of Finance," Lee emphasized that "the evaluation of the Korean won is determined by the market" and the BOK does not have a specific objective for the forex rate.

If necessary, government agencies will intervene to "control fluctuations," according to Lee.

The Ministry of Economy and Finance in South Korea forecasted the country's GDP growth in 2025 to be 1.8%, lower than the previously projected 2.1% for 2024, due to a combination of internal and external stressors.

In November, the BOK reduced its 2025 growth forecast from 2.1% to 1.9%.

The finance ministry will increase tax exemptions for spending in the first half of 2025 and offer incentives to companies that raise wages, according to Reuters.

"The inflation rate and financial stability will be the main concerns, not so much economic growth if the three objectives are conflicting with each other," said Lee.

In November, the BOK unexpectedly reduced its benchmark rate by 25 basis points to 3%, following a 25-basis-point reduction in October. This marked the first time since 2009 that the country's central bank reduced rates in two consecutive meetings.

In November, South Korea's inflation rate increased to 1.5% compared to the previous year, although it was lower than the 1.7% forecasted by economists in a Reuters poll. However, it was still higher than the 1.3% increase seen in the previous month.

"Although we have a solid 20-year track record of a robust economy, I remain cautiously optimistic about the current economic conditions," Lee stated.

— CNBC's Lim Hui Jie contributed to this report.