South Korea¡¯s economy shrank in the final quarter of 2025 due to a broad pullback in demand, underscoring the challenge for authorities whose policy options to stimulate growth are constrained by a wobbly won and mounting financial risks.
Gross domestic product contracted 0.3% in the three months through December from the previous quarter, the Bank of Korea said Thursday. That marked a sharp slowdown from the revised 1.3% growth in the prior quarter and missed the median estimate for a 0.2% expansion in a Bloomberg survey. For 2025 as a whole, the economy expanded 1%, in line with estimates.
The figures highlight the uneven recovery as export-oriented sectors tied to chips continue to outperform small businesses. It¡¯s an effect visible in financial markets, where the benchmark Kospi index has risen in almost every session so far this year. The data aren¡¯t likely to prompt action from the BOK, which shifted its policy stance to neutral just last week, and likewise don¡¯t point to major implications for the global economy.
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