South Korea Government Expects Economy to Slow in 2025

By Kwanwoo Jun

South Korea's government expects its economy to slow this year due to weakening export growth and a sluggish recovery in domestic demand.

The gross domestic product of Asia's fourth-largest economy is forecast to grow 1.8% in 2025, down from the government's July projection of 2.2% growth, said the Ministry of Economy and Finance in a semiannual economic-outlook report released Thursday.

That result would be a slowdown from 2024's estimated 2.1% GDP growth, according to the ministry.

Export growth is expected to moderate because of intense competition in semiconductor and other major industries, amid growing global-trade uncertainty due to the U.S. policy shift towards protectionism under the incoming Trump administration, the ministry report said.

South Korean exports are projected to expand 1.5% in 2025, much weaker than 2024's 8.2% growth, the report said.

Domestic demand in South Korea is forecast to improve but only at a sluggish pace, with construction investment likely to remain weak for the time being, it said.

The ministry expects South Korean inflation to average 1.8% in 2025, softer than 2.1% forecast earlier. Inflation averaged 2.3% in 2024.

It expects the country's current account surplus to narrow to $80 billion in 2025 from an estimated $90 billion in 2024.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com