The South Korean economy posted weaker-than-expected growth last year amid slowing export growth, sagging domestic demand, and a political crisis, central bank data showed on Thursday.
The economic expansion in the fourth quarter also came far below the earlier forecast by the Bank of Korea (BOK) as political turmoil sparked by President Yoon Suk Yeol’s shocking martial law declaration dented private spending and investment, according to the central bank.
The country’s real gross domestic product — a key measure of economic growth — increased 2% in 2024, according to preliminary data from the BOK.
The 2024 figure was lower than the central bank’s forecast of a 2.2% expansion, though the growth accelerated from a 1.4% advance in 2023.
Last year’s growth was led by exports, which surged 6.9% from a year earlier, compared with a 3.5% on-year increase in 2023.
Private spending rose 1.1% in 2024, slower than a 1.8% growth the previous year.
Facility investment gained 1.8%, while construction investment fell 2.7%.
In the fourth quarter alone, Asia’s fourth-largest economy advanced 0.1% on-quarter, far lower than the BOK’s forecast of a 0.4% growth.
On a yearly basis, the economy grew 1.2% in the fourth quarter, slowing from the previous quarter’s 1.5% gain.
Exports inched up 0.3% from three months earlier in the fourth quarter, while imports shed 0.1%.
Private consumption added 0.2% on-quarter, and government spending rose 0.5%. Facility investment also climbed 1.6%.
But construction investment dropped 3.2%, the data showed.
“Heightened political uncertainties affected consumer sentiment and private spending. The situation of the construction industry was worse than expected,” BOK official Shin Seung-cheol told a press briefing.
Yoon declared a shocking martial law on December 3, and the National Assembly voted to impeach him.
Yoon was arrested earlier this month and has come under investigation on charges of leading an insurrection and committing abuse of power.
South Korea had been on an economic recovery track at the beginning of 2024, but momentum has weakened as the growth of exports has slowed and domestic demand remained in the doldrums.
The economy expanded 1.3% from three months earlier in the first quarter but contracted 0.2% in the second quarter before barely growing 0.1% in the third quarter.
The BOK earlier presented a 1.9% growth outlook for the South Korean economy in 2025, which is widely expected to be lowered further.
“Weak domestic demand and the construction industry slump are expected to continue through the first quarter of this year,” Shin said, citing a potential extra budget and policy changes under the U.S. President Donald Trump’s administration as major factors that will affect the economy down the road. (Yonhap)