South Korea's Economy Grows by 0.6% in Q2 2025
South Korea’s economy expanded by 0.6% in the second quarter of 2025, driven by a recovery in private consumption and robust export performance, according to preliminary data released Thursday by the Bank of Korea.
The country’s real gross domestic product (GDP), a key indicator of economic activity, rose by 0.6% between April and June compared to the previous quarter. The result exceeded market expectations, which had forecast a 0.5% growth rate.
This quarterly rebound followed an unexpected 0.2% contraction in the first quarter, marking the first decline since Q2 2024. That downturn was attributed to a domestic political crisis triggered by former President Yoon Suk-yeol’s failed attempt to impose martial law, as well as trade uncertainty linked to U.S. tariffs, which dampened consumer spending and slowed export growth.
On a year-on-year basis, the South Korean economy grew by 0.5% in Q2, compared to a 0.1% contraction in the first quarter. The improvement was supported by both increased exports and stronger domestic demand.
Exports surged by 4.2% quarter-on-quarter, fueled by strong global demand for semiconductors and petrochemical products. Private consumption rose by 0.5%, with notable increases in spending on automobiles and cultural activities. Government spending also climbed by 1.2%.
However, facility investment and construction investment both declined by 1.5%, reflecting weakness in the investment sector.
According to the Bank of Korea, both net exports and domestic demand contributed approximately 0.3 percentage points to GDP growth during the second quarter.
Despite the modest rebound, the central bank maintained a cautious outlook, forecasting full-year economic growth of just 0.8% for 2025. The projection reflects concerns over weak domestic consumption and continued uncertainty surrounding U.S. trade policies, which could weigh on export momentum.
In 2024, South Korea’s economy had expanded by 2%, suggesting a relative slowdown in growth for the current year.
