Korea’s gross domestic product (GDP) grew 1 percent in 2025 from the previous year, driven by strong exports despite weakness in the construction sector, central bank data showed Thursday. It was half the 2 percent expansion of 2024. GDP contracted 0.2 percent from the previous quarter in the first quarter of 2025, rose 0.7 percent in the second quarter and 1.3 percent in the third, and turned to a decline of 0.3 percent again in the fourth. According to an advance estimate from the Bank of Korea, last year’s total growth was driven mainly by a continued increase in exports amid solid overseas demand. Private consumption and government consumption also showed growth, offsetting sluggish domestic investment. Construction investment posted a deeper contraction, a sustained decline due to weak property markets and delayed infrastructure projects. Manufacturing growth slowed, but the service sector expanded, contributing positively to overall economic growth. As for the fourth quarter of last year, construction was the biggest drag on growth. The central bank said that had construction been neutral, the annual growth rate would have reached 2.4 percent. The quarter-on-quarter contraction of 0.3 percent was the worst figure in three years. The figure was 0.5 percentage points below the November forecast of 0.2 percent growth. The contraction is explained by a base effect following strong growth in the third quarter, combined with weaker-than-expected construction investment. The third quarter growth stood at 1.3 percent, which translates to an annualized rate of 5.4 percent, a level far greater compared with last year’s annual growth of 1 percent. “We had already expected 2025 fourth-quarter growth to fall significantly due to the third-quarter base effect. Coupled with poorer-than-expected construction investment, the quarterly figure came in lower than our forecast,” it said. Dave Chia, an economist at Moody’s Analytics, said the unexpected contraction in GDP for the fourth quarter followed a strong third quarter. “Investment and exports dragged on the fourth-quarter print, but private consumption and government spending rose," he said. "Firmer household spending suggests the recovery in consumption will support economic expansion in 2026.” The fourth-quarter contraction has not derailed overall growth, he added, and the policy backdrop points toward a cautious central bank. “With pressure from a weaker won in focus, rate cuts in early 2026 appear unlikely," he said. "Easing now could worsen currency depreciation, heighten financial stability risks and revive inflation pressures. Policymakers are instead prioritizing macro financial stability, and the economy’s full-year expansion reduces the urgency for policy easing.” The Ministry of Economy and Finance said the fourth-quarter figure reflected temporary factors, while the underlying recovery remained intact. "The decline was attributed to a base effect following strong third-quarter growth of 1.3 percent. On a year-on-year basis, GDP still grew 1.5 percent, indicating continued recovery momentum," it said. (ICE SEOUL)

Fonte notizia: The Korea Times