Synopsis
In 2024, South Korea's economy grew by 2%, with per capita income rising by 1.2%. The growth follows a year of political turmoil and challenges in domestic demand and exports. The Bank of Korea has also revised its growth outlook for 2025, indicating potential economic struggles ahead.Key Takeaways
- Economic growth at 2% in 2024.
- Per capita GNI increased by 1.2%.
- Domestic demand struggles continue.
- Export growth showed signs of slowing.
- Political crisis impacted economic forecasts.
Seoul, March 5 (NationPress) The economy of South Korea experienced a 2 percent growth last year, aligning with previous forecasts, as export growth slowed, domestic demand weakened, and a political crisis unfolded, according to data released by the central bank on Wednesday.
The nation’s real gross domestic product (GDP) — a crucial indicator of economic performance — rose by 2 percent in 2024, consistent with the central bank's January prediction.
This growth reflects an acceleration from a 1.4 percent increase recorded in 2023, as reported by Yonhap news agency.
The figures also revealed that the nation’s per capita gross national income (GNI) reached US$36,624 in 2024, representing a 1.2 percent rise from the previous year.
In Korean won, the GNI surged by 5.7 percent to an unprecedented 49.96 million won, driven by the strengthening of the dollar alongside the won's depreciation.
The per capita GNI first surpassed the $30,000 benchmark in 2014.
Last year's economic growth was primarily propelled by exports, which saw a 7 percent increase compared to a 3.6 percent rise in 2023.
Private consumption saw a 1.1 percent growth in 2024, a slowdown from the 1.8 percent expansion of the previous year.
Facility investments grew by 1.6 percent, while construction investments fell by 3 percent.
In the fourth quarter of 2024, South Korea's economy grew by 0.1 percent quarter-on-quarter, remaining unchanged from the January estimate.
Year-on-year, the economy expanded by 1.2 percent in the fourth quarter, down from the prior quarter's 1.5 percent gain.
This reduced quarterly growth arose following President Yoon Suk Yeol's surprising declaration of martial law on December 3, instigating a political crisis. The National Assembly has voted for Yoon's impeachment, pending a ruling from the Constitutional Court.
The nation is also grappling with various challenges as domestic demand continues to stagnate and export growth decelerates amid fierce global competition and uncertainties related to U.S. President Donald Trump’s extensive tariff policy.
Recently, the Bank of Korea (BOK) downgraded its economic growth forecast for South Korea in 2025 to 1.5 percent, down from an earlier prediction of 1.9 percent.
The country’s potential growth rate stands at 2 percent, and this year may mark the first occasion that the annual growth rate dips below this threshold.
To stimulate growth, the central bank has reduced its benchmark interest rate by 0.25 percentage points to 2.75 percent late last month, marking its third rate cut in less than six months.
"As previously anticipated, the economy is expected to grow by 0.2 percent in the first quarter, given the data on weak exports and credit card spending," stated BOK official Kang Chang-goo during a press briefing.
"It remains uncertain whether government stimulus measures, the cut in the special consumption tax, and increased investment in social infrastructure construction will effectively boost growth."
