Gov’t targets 1.8% growth in 2025

Jan 03, 2025, 08:43 am

AsiaToday reporter Lee Ji-hoon

The South Korean economy is expected to grow 1.8 percent this year, the government said Thursday amid the expected export slump following the launch of the new U.S. administration. However, private consumption is expected to recover this year.

Real gross domestic product (GDP) was forecast to grow 1.8 percent in 2025, 0.3 percentage point lower than the previous forecast of 2.2 percent.

This year’s growth forecast was lower than an estimate 2.1 percent by the Organization for Economic Cooperation and Development (OECD), 2.0 percent by the International Monetary Fund (IMF), and 1.9 percent by the Bank of Korea (BOK).

“This year, our economy is expected to face greater internal and external uncertainties than ever, driven by the new US administration and domestic political turmoil,” acting President and Finance Minister Choi Sang-mok said during an economic ministerial meeting Thursday. “With growth projected to slow to 1.8 percent, economic hardships are likely to intensify, along with concerns about external credibility.”

The outlook for sluggish exports is seen as a main factor that significantly lowered this year’s growth forecast. Export was forecast to rise 1.5 percent this year after surging 8.2 percent in 2024 due to the shift in U.S. trade policy after the inauguration of the Trump administration.

However, the outlook for consumer price inflation was set at 1.8 percent for 2025, down from 2.3 percent for 2024. Real purchasing power among local households was expected to recover this year as pressure would weaken from high inflation and high interest rates.

Facility investment was expected to expand 2.9 percent this year on strong demand for capital expenditure especially among chipmakers, after growing 1.3 percent in 224.

The country’s job market could freeze solid this year due to the sluggish economic growth. The number of jobs was expected to climb 120,000 in 2025 after going up 170,000 in the previous year.

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