The South Korean economy expanded by 1% in 2025, driven by strong exports, but faced negative growth in the fourth quarter, according to data from the Bank of Korea. The real gross domestic product (GDP) of the country contracted by 0.2% in the October-December period, the first quarterly contraction since early last year. Despite the fourth-quarter decline, the economy matched the earlier estimate of 1% growth for the entire year.
In the first quarter of 2025, the economy unexpectedly shrank by 0.2% due to a domestic political crisis and uncertainties from global trade measures. However, it rebounded in the following quarters, with growth rates of 0.7% and 1.3% in the second and third quarters, respectively. The per capita nominal gross national income (GNI) of South Korea reached US$36,855 in 2025, showing a 0.3% increase from the previous year.
Exports in the fourth quarter of 2025 declined by 1.7% mainly due to reduced demand for automobiles and machinery, while imports also decreased by 1.5%. Construction investment dropped by 3.5%, and facilities investment slipped by 1.7%, primarily driven by declines in the automotive sector. Private consumption saw a slight increase of 0.3%, and government spending rose by 1.3% during the quarter.
