South Korea’s GDP Falls Short of Expectations, Growth Slows to 1.2%
South Korea’s fourth-quarter GDP growth missed estimates, with a 1.2% increase, year on year, driven by weakness in consumption and the construction sector. This growth rate is the lowest in six quarters. The advance figures also missed the 1.4% expansion expected by economists polled by Reuters.
On a quarter-on-quarter basis, GDP growth was 0.1%, missing the 0.2% forecast in the Reuters poll. However, full-year GDP growth for 2024 was 2%, up from 1.4% in 2023.
The Bank of Korea attributed the decline in private consumption and investment in the construction sector, but said government consumption, facility investment, and exports growth increased. The manufacturing industry grew at a faster rate than last year.
Markets economist Shivaan Tandon at Capital Economics expects growth to slow this year, citing the ongoing political crisis and bleak outlook for the construction sector. Domestic demand remains the main source of weakness in the economy, with sequential growth in consumer spending slowing to 0.2% in the fourth quarter.
The Seoul Stock Exchange’s benchmark Kospi fell 0.47% following the GDP release. The South Korean won weakened 0.13% to 1,436.4. The Bank of Korea has kept its policy rate at 3% since its January meeting, citing downside risks to economic growth and increased exchange rate volatility due to political risks.