South Korea’s latest GDP YoY growth figure, released on December 5, 2025, stands at 0.90%, unchanged from the November print and in line with market expectations. This figure reflects a modest recovery from the mid-year trough of 0.40% in August, signaling a stabilization in economic activity after a year of external and domestic challenges. The Sigmanomics database confirms that this growth rate is below the 12-month average of 1.00%, indicating a subdued but steady expansion.

Drivers this month

• Exports contributed positively amid sustained demand from key partners, adding approximately 0.30 percentage points.
• Domestic consumption remained stable, supported by government stimulus and wage growth, contributing 0.40 percentage points.
• Investment growth slowed slightly, subtracting 0.10 percentage points due to cautious corporate sentiment.

Policy pulse

The Bank of Korea has maintained a cautious monetary stance, keeping the policy rate steady at 2.50%. Inflation remains above the 2% target, but recent data suggest easing pressures. The current GDP growth aligns with the central bank’s objective to balance growth and inflation control.

Market lens

Immediate reaction: The Korean won (KRWEUR) appreciated 0.30% in the first hour post-release, reflecting investor confidence in steady growth. The 2-year government bond yield edged up 5 basis points, signaling moderate optimism about future economic prospects.

Examining core macroeconomic indicators alongside GDP growth provides a fuller picture of South Korea’s economic health. Industrial production rose 1.20% MoM in November, while the unemployment rate held steady at 3.60%, near historic lows. Inflation moderated to 2.30% YoY, down from 2.70% in October, easing pressure on household budgets.

Monetary Policy & Financial Conditions

The Bank of Korea’s steady policy rate at 2.50% reflects a balance between curbing inflation and supporting growth. Credit growth remains moderate at 4.10% YoY, with lending standards tightening slightly amid global financial volatility. The financial sector shows resilience, but risk premiums have widened marginally.

Fiscal Policy & Government Budget

Fiscal stimulus continues to underpin growth, with the government maintaining a 3.20% of GDP deficit target for 2025. Recent budget allocations emphasize infrastructure and green technology investments, expected to boost medium-term productivity. However, rising debt levels warrant caution.

External Shocks & Geopolitical Risks

South Korea faces ongoing geopolitical risks from regional tensions and supply chain disruptions. Export growth is vulnerable to global demand shocks, particularly from China and the US. Energy price volatility also poses inflationary risks.

Drivers this month

• Exports: 0.30 pp, driven by semiconductor and automotive sectors.
• Consumption: 0.40 pp, buoyed by wage growth and government transfers.
• Investment: -0.10 pp, reflecting corporate caution amid global uncertainty.

Policy pulse

The Bank of Korea’s neutral stance supports steady growth without overheating. Inflation easing allows for a wait-and-see approach on rate hikes.

Market lens

Immediate reaction: The KRWEUR currency pair strengthened by 0.30%, while 2-year bond yields rose 5 basis points, indicating improved investor sentiment.

Looking ahead, South Korea’s GDP growth faces a mix of supportive and challenging factors. The baseline scenario projects growth around 1.00% YoY over the next two quarters, supported by steady exports and domestic demand. Inflation is expected to moderate further, allowing monetary policy to remain accommodative.

Bullish scenario (30% probability)

• Global demand rebounds sharply, boosting exports by 5%+.
• Fiscal stimulus accelerates infrastructure spending.
• Inflation falls below 2%, enabling rate cuts.
• GDP growth rises above 1.50% YoY.

Base scenario (50% probability)

• Exports grow modestly at 2-3%.
• Domestic consumption remains stable.
• Monetary policy steady, inflation near target.
• GDP growth steady at ~1.00% YoY.

Bearish scenario (20% probability)

• Geopolitical tensions disrupt supply chains.
• Global recession pressures exports.
• Inflation spikes, forcing rate hikes.
• GDP growth falls below 0.50% YoY.

South Korea’s GDP growth at 0.90% YoY signals a cautiously optimistic outlook amid a complex macroeconomic environment. The economy shows resilience to external shocks, supported by balanced monetary and fiscal policies. However, risks from geopolitical tensions and global market volatility remain. Investors and policymakers should monitor inflation trends and export demand closely to navigate the coming quarters.

Key Markets Likely to React to Gross Domestic Product YoY

South Korea’s GDP growth data typically influence currency, bond, and equity markets. The Korean won (KRWEUR) often reacts swiftly to growth surprises, reflecting trade and capital flow expectations. Government bond yields adjust to growth and inflation outlooks. Equity indices tied to export sectors also show sensitivity. Selected tradable symbols below historically track these dynamics.

• KRWEUR – Korean won to euro, sensitive to trade and growth data.
• KOSPI – South Korea’s benchmark equity index, reflects corporate earnings tied to GDP.
• SAMSUNG – Major export-driven tech stock, correlates with GDP and export trends.
• BTCUSD – Bitcoin, often a risk sentiment barometer impacting emerging market flows.
• USDKRW – US dollar to Korean won, inversely related to KRWEUR and sensitive to growth data.

FAQ

What is South Korea’s latest GDP YoY growth rate?

The latest GDP YoY growth rate for South Korea is 0.90% as of December 2025.

How does this GDP figure compare historically?

The 0.90% growth matches November’s reading and is below the early 2025 peak of 1.80%, indicating moderate but stable growth.

What are the main risks to South Korea’s GDP growth?

Key risks include geopolitical tensions, global demand shocks, and inflation volatility impacting monetary policy.

Key takeaway: South Korea’s GDP growth stabilizes at 0.90%, balancing steady domestic demand and export resilience amid external uncertainties.

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