Home / Business and Economy / South Korea's economy cools: Q4 growth misses forecasts
South Korea's economy cools: Q4 growth misses forecasts
22 Jan
Summary
- Economy grew 1.5% year-on-year in Q4 2025, below expectations.
- Quarterly GDP contracted 0.3%, a sharp slowdown from Q3.
- Trade deal included $350 billion in Korean investment pledges.
South Korea's economic expansion decelerated in the final three months of 2025, with yearly growth reaching 1.5%, falling short of projections. This slowdown was primarily driven by weakening domestic demand as the impact of prior fiscal stimulus measures diminished.
Gross domestic product experienced a contraction of 0.3% on a quarterly basis. This contrasts sharply with the 1.3% growth recorded in the third quarter of 2025 and was below economists' expectations of a 0.1% increase.
A trade agreement was reached in November 2025 between South Korean President Lee Jae Myung and U.S. President Donald Trump. This accord involves $150 billion for U.S. shipbuilding investment and an additional $200 billion in investment pledges from South Korea.
