Seoul skyline.
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In the fourth quarter, South Korea's economy grew 1.2% year-on-year, the slowest growth since the second quarter of 2023.
Advance data was missing the 1.4% increase expected by economists polled by Reuters, with growth also milder compared to the 1.5% increase recorded in the third quarter of 2024.
Quarter-on-quarter GDP growth was also lower than expected, with the economy growing just 0.1% compared to a 0.2% forecast in a Reuters poll.
However, full-year GDP growth in 2024 was 2% compared to last year's growth of 1.4%.
The South Korean won weakened 0.13% to 1,436.4, while the country's benchmark stock index Kospi decreased by 0.47%.
– informed the Bank of Korea that private consumption growth and construction sector investment declined in 2024, but government consumption, facility investment and exports increased, according to a Korean translation of the Google announcement.
BOK also reported that the dynamics in services and construction decreased, but the processing industry grew at a faster pace than a year earlier.
The GDP reading comes after the Bank of Korea made two surprising moves in recent months, first cutting rates by 25 basis points in late November and then maintaining them at its Jan. 16 meeting. Currently, the basic interest rate of BOK is 3%.
After the last meeting, the BOK stated that it is “very likely” that South Korea's GDP growth will not be in line with the forecasts of 2.2% for 2024 and 1.9% for 2025, respectively.
“Downside risks to economic growth have intensified and currency volatility has increased due to unexpected political risks, which have intensified recently… export growth is expected to slow and domestic demand to recover at a slower pace than expected,” he added. BOK warned.
Consumer sentiment in South Korea collapsed in December after the short-lived declaration of martial law by recalled President Yoon Suk Yeol.
The consumer sentiment index fell to its lowest level since November 2022 and stood at 88.4 in December, signaling pessimistic consumer sentiment towards the economy. The reading for the previous month was 100.7.
The index returned to 91.2 in January, but it still missed the 100 points separating consumer pessimism from optimism.