Korean economy grows 1% in 2025

SEOUL, 22nd January, 2026 (WAM) — The economy of the Republic of Korea expanded 1 percent last year, driven by robust exports, but posted negative on-quarter growth in the fourth quarter amid a slump in the construction sector, central bank data showed Thursday.

The country’s real gross domestic product (GDP) – a key measure of economic growth – for 2025 matched the Bank of Korea’s (BOK) earlier forecast, though the growth rate slowed from a 2 percent expansion in the previous year, according to the preliminary data by the central bank.

According to Yonhap News Agency, this marked the slowest growth since 2020, when the economy contracted 0.7 percent amid the COVID-19 pandemic and fell below the country’s potential growth rate of around 1.8 percent.

In the October-December period, the Korean economy unexpectedly contracted 0.3 percent from the previous quarter, marking its first contraction in six months and the weakest quarterly performance since the fourth quarter of 2022.

The central bank earlier forecast the fourth-quarter GDP to expand 0.2 percent.

On an on-year basis, GDP grew 1.5 percent in the fourth quarter, down from a 1.8 percent expansion in the prior quarter.

The economy had earlier unexpectedly shrunk 0.2 percent in the first quarter from the previous quarter. But the economy rebounded in the second and third quarters, posting growth of 0.7 percent and 1.3 percent, respectively, on the back of government stimulus measures and robust exports, especially in the buoyant semiconductor sector.