According to data released by the central bank on Thursday, South Korea’s economy grew more slowly in the last quarter of 2024 as the nation dealt with the aftermath of impeached President Yoon Suk Yeol’s temporary martial law declaration.
“GDP in the fourth quarter expanded 0.1 percent quarter on quarter and 1.2 percent on year,” the central bank said in a statement, the lowest quarterly growth rate of the year after Yoon attempted to suspend civilian rule December 3.
The central bank said that the economy grew by 2 percent for the entire year, which was 0.2 percentage points less than expected given the continuous political unrest that experts say has impacted domestic demand and consumer confidence.
According to data from the Bank of Korea, the fourth-largest economy in Asia expanded by 2%, which is 0.6 percentage points more than growth in 2023. However, the most recent quarter’s figures indicate that the economy is stuttering.
The imposition of martial law on December 3 and the 179-person Jeju Air plane disaster on December 29 were noted by the Bank of Korea in a previous prediction for economic growth in 2025 as having “significantly dampened economic sentiment.”
In that forecast the central bank also revised its full year 2025 growth forecast down to 1.6 to 1.7 percent, down from an earlier projection of 1.9 percent.
“Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis,” said Shivaan Tandon, Capital Economics.
“Domestic demand remains the main source of the weakness in the economy,” he said in a note, pointing to slowing growth in consumer spending.
“The weakness of consumption in Q4 is in line with the latest consumer confidence and labour market data and suggests that perhaps the ongoing political crisis has already started to weigh on growth,” he added.
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