Last year, South Korea's gross domestic product (GDP) grew by 2.0% compared to the previous year. This is 0.2 percentage points lower than the forecast presented by the Bank of Korea in November. It seems that the annual growth rate fell short of expectations due to the impact of the emergency martial law, with the growth rate in the fourth quarter only reaching 0.1% compared to the previous quarter.
According to the '2024 4th quarter and annual real gross domestic product (preliminary)' released by the Bank of Korea on the 23rd, the real GDP growth rate last year recorded 2.0%. This is the third lowest level among the growth rates of the last five years (2020-2024), following 2020 (-0.7%) and 2023 (1.4%).
This level is below the forecasts of both the government and the Bank of Korea. The government had anticipated a real GDP growth rate of 2.2% last July when it announced the 'Economic Policy Directions for the Second Half of 2024.' The Bank of Korea also projected a GDP growth rate of 2.2% last November in its 'Revised Economic Outlook.'
By expenditure item, exports increased by 6.9%, exceeding the growth rate. This is the highest growth rate since 2021 (10.2%). During the same period, imports increased by only 2.4%, down more than 1% from the previous year (3.5%), contributing to GDP growth.
However, all other items fell below 2%. Last year, private consumption grew by 1.1%, worsening compared to the growth rate of 1.8% a year earlier. This is the lowest growth rate since 2020 (-4.6%). Government consumption also recorded only 1.7% growth, marking a growth rate in the 1% range for the second consecutive year.
Construction investment, which had increased by 1.5% in 2023, recorded a decrease of -2.7% last year, turning negative. Looking at the growth rates over the past five years, this is the second lowest after 2022 (-3.5%). Equipment investment also grew by 1.8%, remaining below 2% for the second consecutive year.
By economic activity, the construction sector recorded a growth rate of -2.6%, indicating a contraction. A year ago, it recorded a growth rate of 3.1%, but this has turned negative within a year. During the same period, the manufacturing growth rate increased from 1.7% to 4.0%, while agriculture, forestry, and fisheries improved from -2.6% to 0.6%. The service sector decreased from 2.1% to 1.6%.
Real gross domestic income (GDI) grew by 3.9% on an annual basis, doubling the level of 1.6% a year earlier. As trade conditions improved, it recorded a higher level than the real GDP growth rate.
In the fourth quarter of last year, GDP grew by 0.1%. This is one-fifth of the forecast of 0.5% presented by the Bank of Korea in November. The decline in consumer sentiment due to the impact of emergency martial law seems to have led to a significant drop in the growth rate in the fourth quarter. Looking at the quarterly data, after a 1.3% growth in the first quarter of last year, there was -0.2% in the second quarter and 0.1% in the third quarter.
By expenditure, private consumption grew by 0.2%, government consumption by 0.5%, and exports by 0.3%, while construction investment dropped by 3.2%, keeping the growth rate low. By economic activity, agriculture, forestry, and fisheries recorded the largest decline at -3.9%, followed by construction (-3.5%) and electric, gas, and water service businesses (-2.9%). During the same period, manufacturing grew by 0.1% and the service sector by 0.3%.