The 1% growth rate was the slowest since 2020, when the economy shrank following the outbreak of Covid-19.

Asia’s fourth-largest economy grew 2% in 2024.

Last year’s dip came as the country reeled from the fallout of former president Yoon Suk Yeol’s martial law declaration.

The country’s gross domestic product (GDP) recorded an annual growth of 1%, driven by exports, which rose 4.1%, the Bank of Korea said in a statement.

“On the expenditure side, the growth of exports continued and the growth of private consumption and government consumption expanded, while the decline in construction investment widened,” it said.

South Korea is home to key semiconductor manufacturers – Samsung Electronics and SK hynix – whose products have become crucial to sustaining and further expanding infrastructure for the global artificial intelligence market.

Imports increased 3.8%.

“On the production side, the growth of services expanded, while the decline in construction widened and the growth of manufacturing slowed,” the central bank said.

GDP slipped 0.2% in the January-March quarter from the previous quarter as the country reeled from the shock martial law declaration that plunged it into political turmoil and led to the impeachment of the president by parliament.

The economy then rebounded, with growth of 0.7% and 1.3% in the second and third quarters, respectively.

The central bank projected in its November report that the economy would grow 1.8% this year, citing “a recovery in domestic demand and a robust semiconductor cycle”.