Bin bag panic grips South Korea as huge Iran war crisis budget agreed

South Korea is experiencing a severe economic and social crisis triggered by the war on Iran and the near-total closure of the Strait of Hormuz, a critical oil chokepoint. The nation's profound dependence on imported oil—over two-thirds from the Persian Gulf—has sparked panic, manifesting in a bizarre but logical run on a specific commodity: government-mandated plastic trash bags. These 'pay-as-you-throw' bags are made from naphtha, a petroleum derivative. In Seoul last week, daily sales of these bags surged to nearly 2.7 million, almost five times the normal volume, as citizens scrambled to stockpile what they feared would become scarce, stripping store shelves clean.

This consumer panic is a symptom of broader financial turmoil. Investors have been dumping South Korean assets, leading to historic market declines. The benchmark Kospi index recently suffered its worst single-day drop in history, plummeting more than 12%. Concurrently, the South Korean won has tumbled to its lowest level in 17 years, briefly breaching 1,530 per US dollar. In response to the escalating crisis, the government has agreed to a substantial war crisis budget aimed at stabilizing the economy. The economic outlook has darkened significantly, with the Organisation for Economic Cooperation and Development (OECD) cutting its 2026 growth forecast for South Korea by 0.4 percentage points to just 1.7%.