South Korea recorded its slowest economic growth in half a decade in 2025, with GDP expanding by just 1 per cent, the central bank announced on Thursday.
Okay News reports that the figure marks the weakest performance since 2020, when the economy contracted amid the Covid-19 outbreak.
The Bank of Korea attributed the slowdown to sluggish domestic demand, a troubled housing market, and political instability following former President Yoon Suk Yeol’s martial law declaration.
Exports provided a positive offset, rising 4.1 per cent for the year, while imports increased 3.8 per cent.
Private and government consumption expanded, but a sharp decline in construction investment widened, reflecting ongoing challenges in the real estate sector.
Manufacturing growth also slowed, contributing to the overall weak performance.
The economy contracted in the October–December quarter, though officials noted this was partly due to a base effect from strong third-quarter growth.
The central bank had previously projected 1.8 per cent growth for 2025, citing a recovery in domestic demand and a robust semiconductor cycle.
South Korea’s key semiconductor manufacturers—Samsung Electronics and SK hynix—benefited from strong global demand for AI infrastructure, driving the Kospi index above 5,000 for the first time on Thursday.
Analyst Chung Hae-chang of Daishin Securities said the rally was led by semiconductor firms amid expectations of strong sector earnings.
