[Contribution] Middle East shock tests Korea’s economic resilience

The Middle East conflict has heightened uncertainty around global oil trade, affecting South Korea's economy due to its heavy reliance on oil imports. Around 70% of Korea's crude oil imports come from the Middle East, with 90% passing through the Strait of Hormuz. The conflict has led to a 17% increase in gasoline prices, adding to living costs. Equity markets have experienced volatility, but business confidence has remained relatively resilient. However, consumer sentiment has deteriorated due to higher fuel prices and inflation concerns. The Bank of Korea is likely to remain cautious, with limited room for near-term rate cuts, potentially impacting economic growth.