FX.co ★ South Korea Q4 GDP Unexpectedly Contracts

In the final quarter of 2025, South Korea's economy saw a contraction of 0.3% compared to the previous quarter, reversing the 1.3% growth experienced in the third quarter and falling short of the anticipated 0.1% increase. This marked the most significant quarterly decline in three years, largely attributed to a dip in domestic demand and a 1% decrease in non-semiconductor exports. While private consumption increased by 0.3%, driven by greater expenditure on services such as healthcare, spending on goods declined, particularly in the automotive sector. Government consumption saw a 0.6% rise, largely due to the increased allocation for healthcare benefits. However, construction investment decreased by 3.9%, with both building and civil engineering projects experiencing slowdowns. Additionally, facilities investment dropped by 1.8% owing to reduced spending on transportation equipment. Exports decreased by 2.1%, negatively impacted by reductions in the motor vehicle and machinery and equipment sectors, while imports contracted by 1.7% amidst fewer purchases of natural gas and motor vehicles. On an annualized basis, the economy grew by 1.5% in the fourth quarter, falling short of the projected 1.8% growth.