Senior economists in Seoul say rising tensions between the United States and its NATO allies over Greenland could have indirect but measurable effects on South Korea’s economy, as global financial markets react to growing geopolitical uncertainty.

The dispute, centered on U.S. efforts to expand strategic access to Greenland amid concerns over Arctic shipping routes, has strained relations with European allies and unsettled investors. While no trade measures have been announced, economists say the impact is already being transmitted through financial channels.

According to data from the Bank of Korea, foreign investors sold a net ₩3.1 trillion ($2.3 billion) in Korean equities in the two weeks following renewed transatlantic tensions, contributing to a 2.4 percent decline in the KOSPI index. Over the same period, the Korean won weakened by around 1.8 percent against the U.S. dollar.

South Korea is particularly exposed to such shifts because exports account for about 44 percent of gross domestic product, among the highest ratios in the OECD. The United States and the European Union together absorb nearly 28 percent of Korea’s total exports, led by semiconductors, automobiles, and industrial machinery, according to the Ministry of Trade, Industry and Energy.

“Even without direct trade actions, slower investment and consumption in the U.S. and Europe can quickly affect Korean manufacturers,” said Park Sang-hyun, chief economist at Hi Investment & Securities. He added that order delays and inventory adjustments tend to appear before official trade data show a slowdown.

Economists say the episode highlights how geopolitical disputes increasingly affect open economies through financial markets rather than policy announcements. As global alliances grow more fragmented, analysts warn that indirect shocks, transmitted through capital flows, exchange rates, and demand expectations, are likely to remain a persistent risk for South Korea’s growth outlook.

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