South Korea GDP grows 1.8% in Q1 2025, fastest pace in over 5 years
Synopsis
South Korea's economy grew 1.8% in Q1 2025 — its fastest quarterly pace since 2020 — after contracting the previous quarter. A 5.9% export surge led by semiconductors and a four-year high in facility investment drove the rebound, and the Bank of Korea's August forecast revision could now point to a stronger full-year outlook.
Key Takeaways
South Korea's real GDP grew 1.8 percent quarter-on-quarter in Q1 2025 , the fastest pace since Q3 2020 .
On a year-on-year basis, GDP expanded 3.8 percent — the highest annual growth since Q4 2021 .
Exports rose 5.9 percent quarter-on-quarter, driven by global demand for semiconductors , machinery, and automobiles.
Facility investment surged 6.6 percent , the strongest gain in four years .
Nominal GDP jumped 10.5 percent quarter-on-quarter — the sharpest nominal expansion since Q1 1976 .
The BOK will incorporate the upward revision into its annual growth forecast due in August 2025 .
South Korea's economy expanded at its fastest quarterly pace in more than five years during the January–March 2025 period, with real gross domestic product (GDP) rising 1.8 percent quarter-on-quarter — 0.1 percentage point above the preliminary estimate. The upward revision, confirmed by the Bank of Korea (BOK) on Tuesday, 9 June, was driven by stronger-than-expected facility investment and private consumption data.
Strongest Growth Since 2020
The 1.8 percent quarterly expansion is the highest since the third quarter of 2020, when South Korea's economy grew 2.3 percent amid a post-pandemic rebound. On a year-on-year basis, GDP surged 3.8 percent in the first quarter — a sharp acceleration from the 1.6 percent on-year growth recorded in the fourth quarter of 2024, and the strongest annual reading since the fourth quarter of 2021.
This comes after the economy contracted 0.1 percent on-quarter in the fourth quarter of 2024, weighed down by sluggish manufacturing. The first-quarter rebound signals a meaningful reversal of that trend.
What Drove the Expansion
Exports were the primary engine of growth, advancing 5.9 percent from the previous quarter — the highest quarterly export growth since the third quarter of 2020 — underpinned by robust global demand for semiconductors, machinery, and automobiles. Net exports contributed 1.1 percentage points to overall quarterly growth.
On the investment side, facility investment surged 6.6 percent, the strongest gain in four years, while construction investment rose 1.4 percent. Domestic demand as a whole contributed 0.7 percentage points to first-quarter growth. Private consumption grew a modest 0.6 percent, though government spending contracted 0.4 percent.
Upward Revision Explained
Kim Hwa-yong, director of the production, expenditure and income division at the BOK, told reporters at a press conference: 'A 0.1 percentage point gain in the first-quarter GDP is projected to increase the annual growth by 0.1 percentage point. This change is expected to be reflected on the central bank's revised growth forecast to be released in August.'
The BOK attributed the revision to updated statistics on facility investment and private consumption that were incorporated into the final figures.
Nominal GDP Hits Historic High
On a nominal basis, South Korea's GDP surged 10.5 percent from the previous quarter — the sharpest nominal expansion since the first quarter of 1976, when the economy grew 13 percent. Year-on-year, nominal GDP spiked 17.1 percent, reflecting both real growth and price-level changes.
What to Watch Next
The BOK is scheduled to release its revised annual growth forecast in August 2025, which will incorporate the first-quarter upgrade. Analysts will be watching whether export momentum — particularly in semiconductors — holds through the second quarter amid evolving global trade conditions. As Asia's fourth-largest economy, South Korea's performance carries broad regional significance for supply chains and tech-sector outlooks.
Point of View
But the composition matters more than the headline. Export-led growth — particularly in semiconductors — is inherently cyclical and vulnerable to US-China trade dynamics and global tech demand cycles. The modest 0.6% private consumption gain suggests domestic demand is not yet firing on all cylinders, and the government spending contraction is a mild drag. The real test for South Korea's growth story in 2025 is whether the semiconductor upcycle sustains through Q2 and whether domestic consumption can broaden the base beyond external demand. The BOK's August forecast revision will be the next credibility checkpoint.
NationPress
12 Aug 2026
Frequently Asked Questions
How much did South Korea's economy grow in Q1 2025?
South Korea's real GDP grew 1.8 percent quarter-on-quarter in Q1 2025, which is 0.1 percentage point above the earlier preliminary estimate. On a year-on-year basis, the economy expanded 3.8 percent — the highest annual growth rate since Q4 2021.
What drove South Korea's economic growth in Q1 2025?
Exports were the primary driver, rising 5.9 percent quarter-on-quarter on strong global demand for semiconductors, machinery, and automobiles. Facility investment also surged 6.6 percent — a four-year high — while private consumption grew 0.6 percent.
Why was South Korea's Q1 GDP estimate revised upward?
The Bank of Korea revised the first-quarter GDP figure upward by 0.1 percentage point after incorporating updated statistics on facility investment and private consumption into the final calculation.
When will the Bank of Korea update its annual growth forecast?
The BOK is expected to release a revised annual growth forecast in August 2025, which will reflect the upward revision to first-quarter GDP. The central bank has indicated the Q1 upgrade could lift the full-year projection by approximately 0.1 percentage point.
How does Q1 2025 compare to South Korea's recent economic performance?
The 1.8 percent quarterly growth is the strongest since Q3 2020, when GDP grew 2.3 percent. It marks a sharp turnaround from Q4 2024, when the economy contracted 0.1 percent quarter-on-quarter due to sluggish manufacturing.
