South Korea’s economy shrank by 0.2% quarter-on-quarter in the three months to December 2025, slightly better than the earlier estimate of a 0.3% decline, and reversing the 1.3% expansion recorded in Q3. This was the first quarterly contraction since the first quarter of 2025, reflecting weaker domestic demand and a drop in non-semiconductor exports.
Private consumption grew by 0.3%, as higher spending on services more than offset a decline in goods purchases. Government consumption rose 1.3%, supported by increased expenditure on healthcare benefits.
Construction investment fell 3.5%, with both building construction and civil engineering activity contracting. Facilities investment declined 1.7%, driven by reduced spending on transportation equipment.
Exports decreased 1.7%, weighed down by lower shipments of motor vehicles and machinery & equipment, while imports fell 1.5% amid reduced purchases of natural gas and motor vehicles.
On an annual basis, the economy expanded by 3% in Q4, beating market expectations of 2.5% growth.
