The economy south korean grew by 2% in all of 2024, a level below expectations which responds to the weakness of consumption and the slowdown in exports, to which is added the political crisis unleashed in the last month of the year after the declaration of martial law. Although the figure is above the increase in gross domestic product (GDP) of 1.4% in 2023, it contrasts with the Bank of Korea (BoK) forecast that expected an expansion of 2.2%.
In those last three months of the year, the South Korean GDP advanced just 0.1% compared to the previous quarter (well below the forecast of 0.4% announced by the BoK) and 1.2% at an annual rate. Despite starting the year with an expansion of 1.3% in the first quarter, the GDP of Asia’s fourth economy added a contraction of 0.2% and an advance of 0.1% in the second and third, which which underlines this slowdown.
Imports, which account for more than 40% of GDP, were the engine of growth last year, growing 6.9% in all of 2024, according to data published today Thursday by the South Korean central bank. However, in the last quarter of the year, Shipments abroad, which had grown by up to 1.8% in January-March, increased by just 0.3% compared to the previous three months.
Private consumption grew by 1.1% in all of 2024, below the 1.8% recorded the previous year. In turn, capital spending expanded by 1.8% over the past year, although investment in the construction sector shrank by 2.7%. Construction investment was also the weakest indicator in the fourth quarter of 2024, falling 3.2% compared to July-September.
In October-December, private consumption in turn increased by 0.2% in relation to the previous three months, which contrasts with the growth of half a percentage point in the previous quarter.
The slowdown of the last quarter could have been influenced by surprising declaration of martial law carried out on December 3 by South Korean President Yoon Suk-yeol, which has since plunged the country into a spiral of political uncertainty and its worst crisis in decades. Yoon is being investigated for a possible crime of insurrection and has been disqualified by Parliament, which must decide between now and June whether to reinstate him or ratify his dismissal, which would imply the calling of early presidential elections.
The BoK forecast 1.9% growth for all of 2025, a figure that analysts expect to be cut due to the political instability in the country and also the uncertainties posed by Donald Trump’s return to the White House.
