INCHEON, SOUTH KOREA – MAY 22: Shoppers look at goods at a Wal-Mart store May 22, 2006 in Incheon, South Korea.
Chung Sung-jun | Getty Images News | Getty Images
South Korea’s economic growth slowed in the final quarter of last year as a sharp slump in construction investment, coupled with a pullback in exports, outweighed modest gains in consumption.
The economy expanded 1.5% in the October to December period from a year earlier, according to the central bank’s advance estimates, missing economists’ forecast of 1.9%. That compared with 1.8% growth in the prior quarter, when the economy expanded at its fastest pace in over a year.
On a quarterly basis, gross domestic product contracted 0.3%, marking the steepest slowdown since the fourth quarter of 2022. Economists polled by Reuters had expected a 0.1% expansion.
Construction investment shrank 3.9% from the previous quarter as both building and civil engineering activity declined, according to data from the Bank of Korea. Facilities investment fell 1.8%, led by a drop in transportation equipment.
Exports pulled back 2.1% from the previous quarter as motor vehicles and machinery shipments fell. Manufacturing and utilities supply, including electricity, gas and water, dropped 1.5% and 9.2%, respectively.
Meanwhile, private consumption expanded 0.3% on services expenditures while government spending rose 0.6%, driven by health care benefits.
South Korean president Lee Jae Myung and American counterpart Donald Trump reached a trade agreement in November, which included $150 billion of Korean investment in the U.S. shipbuilding sector and an additional $200 billion earmarked for an investment pledge.
In exchange, the Trump administration agreed to reduce tariffs on South Korean cars and auto parts to 15% from 25%.
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