South Korea’s economy hit a standstill in the first quarter of 2025, failing to register any year-on-year growth, according to revised figures released Thursday by the Bank of Korea.
The updated data paints a bleak picture for Asia’s fourth-largest economy, which has been reeling from a combination of geopolitical tensions and domestic unrest. The fallout from former President Yoon Suk Yeol’s short-lived imposition of martial law in December — which led to his impeachment — continues to cast a long shadow over the country’s economic outlook.
In quarterly terms, South Korea’s gross domestic product contracted by 0.2% compared to the final quarter of 2024. While preliminary estimates in April had hinted at a modest 0.1% decline year-on-year, the revised numbers show zero growth instead — a rare and concerning outcome.
This stagnation marks the fourth consecutive quarter in which GDP growth has hovered below 0.1%, underscoring persistent weaknesses across key sectors, including exports and tech manufacturing.
In response to sluggish activity, the Bank of Korea cut its benchmark interest rate in May from 2.75% to 2.5%, a level not seen since late 2022. However, monetary easing has done little to restore confidence so far.
The central bank has also slashed its full-year growth forecast to 0.8%, a significant downgrade from the 1.5% projection made just three months earlier.
Once a symbol of resilience and industrial prowess, South Korea now finds itself at a crossroads, grappling with global headwinds and internal political shocks that have left its economy effectively in neutral.
