Korean economy grew by just 0.1% in Q4 2024

Korean economy grew by just 0.1% in Q4 2024. January. 24, 2025 08:15. by ?????, ??=????? will@donga.com.
The Korean economy expanded by a mere 0.1% in the fourth quarter of 2024 (October–December) as political uncertainty deepened and domestic demand weakened in the aftermath of the December 3 emergency martial law declaration. This marks the second consecutive quarter of 0.1% growth, with the annualized growth rate barely reaching 2%. The outlook for 2025 appears equally bleak, with exports expected to face significant headwinds, fueling concerns that the nation may be slipping into a prolonged period of sluggish growth.

On Thursday, the Bank of Korea (BOK) reported that real gross domestic product (GDP) growth in Q4 2024 was 0.1% year-on-year, representing just one-fifth of the 0.5% growth forecasted in November 2024. Although quarterly growth had remained positive for five consecutive quarters since Q1 2023, it faltered in the second quarter of 2024, contracting by -0.2%, and failed to rebound meaningfully in the subsequent quarters. The back-to-back quarters of 0.1% growth represent the weakest performance since 1979, excluding crises such as the second oil shock, the foreign exchange crisis, and the COVID-19 pandemic. Annual growth for 2024 stood at 2.0%, falling short of the 2.2% projection despite record-high exports.

The BOK attributed this underperformance to a sharper-than-anticipated contraction in private consumption and construction investment. Economic sentiment and private consumption took a significant hit during the fourth quarter, driven by the declaration of martial law. Construction investment saw a notable decline of 3.2%, marking the third consecutive quarter of contraction.

“If the impact of the fast-track budget is not as significant as anticipated, or if economic sentiment continues to deteriorate, we will take timely measures in the first quarter,” said Lee Seung-han, head of the Comprehensive Policy Division at the Ministry of Economy and Finance.