Korea's GDP grows 2 percent, missing expectation, on martial law turmoil
Published: 23 Jan. 2025, 17:52
Updated: 23 Jan. 2025, 20:32
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- SHIN HA-NEE
- [email protected]
![A pedestrian walks past a vacant retail space in Myeong-dong, central Seoul, on Jan. 7. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2025/01/23/db4c8087-a299-415f-837d-1cdff1fef736.jpg)
A pedestrian walks past a vacant retail space in Myeong-dong, central Seoul, on Jan. 7. [YONHAP]
Korea’s economy grew less than expected last year due to political turmoil triggered by President Yoon Suk Yeol’s martial law declaration.
Real GDP expanded just 0.1 percent in the fourth quarter compared to the preceding three months, according to an advance estimate the Bank of Korea (BOK) released Thursday, coming well below its November projection of 0.5 percent. The jump brought full-year growth to 2 percent in 2024, underperforming the central bank's 2.2 percent November expectation and the government's 2.1 percent estimate released in its Economic Policy Direction on Jan. 2.
Korea’s real GDP had increased by an expectation-beating 1.3 percent in the first quarter of 2024, but recorded a quarterly contraction of minus 0.2 percent in the second quarter, followed by another weak 0.1 percent growth in the third quarter.
The central bank cited the worse-than-expected drop in construction investment, driven by the prolonged slowdown in the industry, as well as the slow recovery of private consumption for the weak fourth quarter growth.

“By segment, private consumption and construction investment data missed expectations by a significant margin,” said Shin Seung-chul, director-general of the BOK’s economic statistics division, during a press briefing on Thursday. “Economic sentiment contracted significantly due to the heightened political uncertainty in December, impacting private consumption, and the slowdown in the construction sector was even worse than expected.”
The director-general also noted that the deadly Jeju Air crash on Dec. 29 had likely further dampened consumer sentiment, although its impact on the fourth quarter reading was limited because the event occurred near the end of the year.
Private consumption, which the BOK had previously estimated would grow 0.5 percent in the fourth quarter, inched up merely by 0.2 percent from the previous quarter, following a 0.5 percent increase in the July-September period. Private consumption rose 1.1 percent in 2024.
Government spending rose 0.5 percent in the fourth quarter, bringing the year’s total growth to 1.7 percent.
Construction investment dropped 3.2 percent in the fourth quarter, extending its quarterly contraction for the third quarter in a row. Weighed down by a heavy cost burden, construction investment retreated 2.7 percent throughout the year.
Facilities investment rose 1.6 percent, resulting in an annual growth of 1.8 percent.
All eyes are on exports next year, with onlookers concerned that structural factors such as harsh competition from Chinese chipmakers will continue to slow their growth.
Exports increased steeply last year by 6.9 percent, driven by advances in technology sectors such as chip manufacturing, and imports rose 2.4 percent. The former grew 0.3 percent in the fourth quarter while the latter declined 0.1 percent.
“The impact of the increased chip supply from Chinese companies became evident in the third quarter results, and new political uncertainty emerged in the fourth quarter,” said Shin.
“We believe such factors will pose risks for Korea’s economic growth in the first quarter as well as the remainder of this year.”
Before releasing its advance estimates, the BOK issued a rare January report on Monday, revising its 2024 growth projection downward from 2.2 percent to a range of 2 to 2.1 percent ahead of its official outlook update next month. Fourth-quarter growth expectations similarly fell from 0.5 percent to between 0.1 and 0.2 percent.
The central bank cited political uncertainty surrounding the martial law declaration on Dec. 3 and its impact on consumer confidence for its downward adjustment.
BY SHIN HA-NEE [[email protected]]
with the Korea JoongAng Daily
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