The importance of political stability to economic stability was strongly reaffirmed by the fallout of the illegal martial law declaration of Dec. 3, 2024. The Korean economy is bottoming out of the trough with political stability restored and two supplementary budgets in the form of consumption coupons, equivalent to approximately 1 percent of the gross domestic product (GDP). Against many headwinds, keeping recovery momentum intact is critical for the Korean economy. The year 2026 should be made a year of stability and growth. However, recovery will likely be modest, with around 1.8-2 percent growth expected next year due to the impact of the U.S. tariffs, the U.S.-China rivalry, weakening global growth and trade conditions, the sluggishness in the construction sector and delayed restructuring in the chemicals industry, an overheated real estate market, and the depreciating Korean won. Exports are forecast to grow, despite increased tariffs, on the back of strong global demand for semiconductors. However, uncertainty over tariffs and structural adjustments in global supply chains will