2025 KDI Economic Outlook: Update
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This issue presents an updated snapshot of Korea's economic forecast, revising the projections from the November 2024 KDI Economic Outlook to account for evolving economic conditions over the past three months.
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Korea's 2025 growth forecast lowered to 1.6% from 2.0% in 2024.
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• Weaker demand and exports amid worsening conditions led to a 0.4%p downgrade.
• Domestic political instability and U.S. policy changes further weighed on growth.
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Korea’s economy is projected to grow 1.6% in 2025 (previous forecast: 2.0%), down from 2.0% in 2024, as domestic demand sees a slight recovery while export growth slows due to worsening global trade conditions. Private consumption is expected to rise 1.6% (prev.: 1.8%), up from 1.1% last year, supported by interest rate cuts and easing political uncertainty. Equipment investment is forecast to grow 2.0%, driven by the strength of the semiconductor sector, though external risks remain a challenge. Meanwhile, construction investment is set to decline 1.2%, weighed down by sluggish orders and tight funding conditions. Export growth is also expected to slow significantly to 1.8% (prev.: 2.1%), a sharp drop from 6.9% in 2024, with semiconductor exports maintaining positive momentum but showing only limited gains.
Key Risks to Watch
Rising global trade uncertainty, driven by protectionist policies and shifting U.S. trade dynamics, could hurt exports. At the same time, prolonged political instability may dampen consumer and business confidence, delaying the recovery in domestic demand.
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Global Media Spotlight on KDI’s Economic Outlook
KDI’s latest economic outlook has drawn attention from major international media, highlighting key forecasts on Korea’s growth, investment, and trade.
Explore the headlines:
• [AP] South Korea’s top think tank lowers economic growth projection, citing Trump’s tariffs full article
• [Xinhua] S. Korea's state-run think tank revises down 2025 growth outlook to 1.6 pct
full article
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KDI Monthly Economic Trends (2025.02)
Modest Growth Overshadowed by Rising External Risks
The Korean economy shows modest production growth, but rising external uncertainties are increasing downside risks. While semiconductor-led manufacturing has improved, sluggish construction activity and weak domestic demand recovery weigh on growth.
Read more
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KDI President at the Global Labor Market Conference
At the Global Labor Market Conference, held in Riyadh, Saudi Arabia, KDI President Dongchul Cho underscored the importance of equal employment opportunities, institutional support for childcare, and the need for policies enabling stable-post retirement employment to address labor market challenges.
Read more
Real estate project financing has become a hotbed of get-rich-quick schemes
The study reveals that Korea's real estate financing (PF) heavily relies on debt and third-party guarantees, destabilizing the economy. Reform is needed to increase developers' equity investment and reduce dependence on guarantess.
Full video
A survey was conducted to select the most socially significant and widely discussed KDI reports published in 2024. Based on responses from 6,311 participants, we present the top three reports chosen by the public.
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In case you missed them:
#1 Korea's National Pension full report
#2 High Inflation and Consumption Stagnation full report
#3 Women's Career Interruptions and the Declining Fertility Rate in South Korea full report
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