South Korean economy grows 1 pct in 2025; Q4 GDP contracts 0.2 pct: BOK

The country's real gross domestic product -- a key measure of economic growth -- contracted 0.2 per cent from the previous quarter in the October-December period, compared with its earlier estimate of a 0.3 per cent contraction, according to the preliminary data from the Bank of Korea.

It marked the country's first quarterly contraction since the January-March period of last year, when the economy shrank 0.2 per cent.

On an annual basis, GDP grew 1.6 per cent in the fourth quarter, down from a 1.8 per cent on-year expansion in the prior quarter.

For the entire year of 2025, the economy expanded 1 per cent, matching the BOK's earlier estimate and slowing from the previous year's 2 per cent growth.

The economy unexpectedly shrank 0.2 per cent in the first quarter of 2025 from the previous quarter as a domestic political crisis triggered by then-President Yoon Suk Yeol's martial law declaration, along with uncertainties stemming from US President Donald Trump's sweeping tariff measures, weighed on consumer spending and dampened export growth.

But the economy rebounded in the second and third quarters, posting growth of 0.7 per cent and 1.3 per cent, respectively, on the back of government stimulus measures and robust exports amid the semiconductor upcycle.

The data also showed that the country's per capita nominal gross national income stood at US$36,855 in 2025, marking a 0.3 per cent increase from a year earlier.

In terms of the Korean won, the GNI climbed 4.6 per cent amid the weakness of the local currency, the BOK said.

The per capita GNI first surpassed $30,000 in 2014 and continued to rise, nearing $38,000 in 2021. But the figure fell to the $35,000 range in 2022 before rebounding to $36,195 in 2023.

Growth then slowed to 1.5 per cent in 2024 and 0.3 per cent last year, keeping the figure in the $36,000 range for the third straight year.

In the fourth quarter, exports fell 1.7 per cent from the previous quarter due mainly to the sagging auto and machinery demand, while imports retreated 1.5 per cent.

Construction investment plunged 3.5 per cent, while facilities investment slipped 1.7 per cent, driven largely by declines in automobiles and other transport equipment.

Private consumption edged up 0.3 per cent, while government spending increased 1.3 per cent during the three months.

For the entirety of 2025, exports jumped 4.2 per cent on-year, led by strong demand for semiconductors, though it slowed from 6.8 per cent growth the previous year. Imports advanced 3.8 per cent on-year.

Private spending rose 1.3 per cent, accelerating from 1.1 per cent growth the previous year.

But construction investment sank 9.8 per cent, compared with a 3.3 per cent contraction in 2024, while facility investment logged a 2 per cent on-year expansion.

Going forward, the BOK said it projects the economy to grow 2 per cent in 2026, citing brisk exports and a recovery in private consumption.

The Korea Herald