South Korea’s economic growth ranked near the bottom among major economies in the fourth quarter of last year, as weak domestic demand and ongoing political uncertainty continued to weigh on performance. With similar headwinds persisting into this year, concerns are rising that the economy could contract in the first quarter.
Data from the Bank of Korea’s Economic Statistics System (ECOS), released on Apr. 6, showed that real gross domestic product (GDP) rose just 0.06% quarter over quarter in the October–December period. That placed S. Korea 29th among 37 countries—including China—monitored by the Organisation for Economic Co-operation and Development (OECD).
The figure came in slightly below the central bank’s previous estimate of 0.1%, indicating the country only narrowly avoided a contraction.
In contrast, the top five countries all posted growth rates above 1%: Ireland at 3.613%, Denmark at 1.849%, Türkiye at 1.688%, China at 1.600%, and Portugal at 1.542%. The United States recorded 0.607% growth, while Japan expanded by 0.556%, both outperforming S. Korea.
South Korea’s quarterly rankings have remained in the lower tier for three consecutive quarters. The economy posted 1.3% growth in the first quarter of 2023, ranking sixth among the 37 countries.
However, it slipped to -0.228% in the second quarter (32nd), 0.1% in the third quarter (26th), and 0.066% in the fourth (29th). Economists attribute the downturn to sluggish consumer spending and weak investment, further exacerbated by political turmoil in December and a broader climate of uncertainty at home and abroad.
Looking ahead, prospects for a rebound in the first quarter of 2024 appear limited. Large-scale wildfires and ongoing political gridlock following the impeachment crisis have further dampened consumer and business sentiment. At the same time, export momentum is showing signs of fatigue.
The Bank of Korea reported that exports in January declined 9.1% from a year earlier, marking the first year-on-year drop in 16 months. Although the central bank projected a modest 0.2% growth for the first quarter in its February outlook, analysts have begun to question whether even that target will be achievable.
