South Korea’s GDP growth rate of 1.30% QoQ in Q4 2025 represents a sharp acceleration from the 0.70% recorded in Q3 and reverses a series of sluggish quarters. Over the past year, quarterly growth hovered near zero or slightly negative, with readings such as -0.20% in June and September 2024. This recent surge reflects a broad-based recovery in domestic demand and exports amid easing global supply chain pressures.

Drivers this month

• Strong export growth, particularly in semiconductors and automotive sectors, contributed approximately 0.50 percentage points (pp) to GDP.
• Domestic consumption rebounded, adding 0.40 pp, supported by rising wages and improved consumer confidence.
• Investment growth accelerated, especially in technology and infrastructure, contributing 0.30 pp.
• Inventory restocking added 0.10 pp, reflecting improved supply chain conditions.

Policy pulse

The 1.30% growth rate exceeds the Bank of Korea’s inflation-adjusted target range, suggesting the economy is expanding above trend. This may prompt the central bank to maintain a cautious stance on interest rates, balancing growth with inflation control.

Market lens

Immediate reaction: The KRW appreciated 0.40% against the USD within the first hour of the release, while 2-year government bond yields rose by 5 basis points, reflecting increased growth optimism.

Core macroeconomic indicators underpinning the GDP growth include industrial production, trade balances, and labor market data. Industrial output rose 2.10% MoM in November 2025, the highest since mid-2024. Exports grew 6.50% YoY in November, driven by chip exports and electric vehicles. The unemployment rate held steady at 3.10%, near historic lows.

Monetary Policy & Financial Conditions

The Bank of Korea has kept its policy rate at 3.50% since September 2025, signaling a wait-and-see approach amid mixed inflation signals. Financial conditions remain moderately accommodative, with credit growth steady at 4.20% YoY. The recent GDP print may increase pressure for a gradual tightening if inflationary pressures persist.

Fiscal Policy & Government Budget

Fiscal stimulus measures, including infrastructure spending and targeted subsidies, have supported growth. The government’s budget deficit narrowed to 2.80% of GDP in 2025, down from 3.50% in 2024, reflecting improved revenue collection amid economic expansion.

Chart Insight

The chart illustrates a strong inflection point in South Korea’s GDP trajectory, reversing a year-long stagnation. This suggests the economy is gaining momentum, with potential spillovers into employment and investment growth.

Market lens

Immediate reaction: The KOSPI index rose 1.10% following the GDP release, reflecting investor optimism. The KRW/USD pair strengthened, and 10-year government bond yields edged up 7 basis points, pricing in stronger growth prospects.

Looking ahead, South Korea’s growth trajectory faces a mix of opportunities and risks. The baseline forecast anticipates continued moderate expansion of 0.80–1.00% QoQ in early 2026, supported by robust exports and domestic demand.

Bullish scenario (30% probability)

• Global semiconductor demand surges, boosting exports by 10% YoY.
• Fiscal stimulus is extended, supporting infrastructure and green technology investments.
• Monetary policy remains accommodative, fueling credit growth and consumption.

Base scenario (50% probability)

• Exports grow steadily at 4–5% YoY amid moderate global demand.
• Domestic consumption and investment maintain current momentum.
• Monetary tightening is gradual, balancing inflation and growth.

Bearish scenario (20% probability)

• Geopolitical tensions disrupt trade routes, reducing exports by 3% YoY.
• Inflation spikes force aggressive monetary tightening, slowing domestic demand.
• Global recession risks dampen external demand and investment.

External Shocks & Geopolitical Risks

Heightened tensions in Northeast Asia and potential supply chain disruptions remain key downside risks. However, easing US-China trade frictions could bolster export prospects.

South Korea’s 1.30% QoQ GDP growth in Q4 2025 signals a robust economic rebound, reversing a year of sluggishness. The data supports a cautiously optimistic outlook, with balanced risks from global uncertainties and domestic policy adjustments. Financial markets have responded positively, pricing in sustained growth but mindful of inflationary pressures. Policymakers face the challenge of nurturing expansion while containing inflation and geopolitical risks.

Structural & Long-Run Trends

Long-term drivers such as digital transformation, green energy adoption, and demographic shifts will shape South Korea’s growth potential. Continued investment in innovation and export diversification remains critical to sustaining momentum beyond cyclical fluctuations.

Key Markets Likely to React to GDP Growth Rate QoQ

South Korea’s GDP growth rate is a critical barometer for regional and global markets. Equity indices, currency pairs, and bond yields closely track these data releases. Investors monitor these markets for signals on economic health and policy shifts.

• KOSPI – South Korea’s benchmark stock index, highly sensitive to GDP growth and export trends.
• KRWUSD – The Korean won to US dollar exchange rate, reflecting trade flows and capital movements.
• 005930.KS – Samsung Electronics, a major export driver and economic bellwether.
• BTCUSD – Bitcoin, often viewed as a risk sentiment proxy, reacts to macroeconomic shifts.
• USDCNY – US dollar to Chinese yuan, impacting South Korea’s trade environment.

Indicator vs. KOSPI Since 2020

The following mini-chart compares South Korea’s quarterly GDP growth rate with the KOSPI index performance since 2020. The data show a strong positive correlation, with KOSPI rallies typically following GDP accelerations. For example, the 1.30% GDP print in Q4 2025 coincided with a 1.10% KOSPI gain, reinforcing the index’s sensitivity to economic momentum.

FAQs

What is the latest GDP Growth Rate QoQ for South Korea?

The latest GDP growth rate for South Korea is 1.30% quarter-on-quarter for Q4 2025, marking a strong rebound from 0.70% in Q3 2025.

How does the recent GDP growth compare historically?

This 1.30% growth is the fastest quarterly expansion in over a year, reversing a series of near-zero or negative growth quarters seen throughout 2024.

What are the key risks to South Korea’s economic outlook?

Key risks include geopolitical tensions in Northeast Asia, global trade disruptions, and potential inflation-driven monetary tightening.

Takeaway: South Korea’s 1.30% QoQ GDP growth in Q4 2025 signals a meaningful economic rebound, but policymakers must navigate inflation and geopolitical risks carefully to sustain momentum.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 12/3/25