Seoul, Jan 30 (NationPress) In 2025, South Korea's industrial output experienced its slowest growth in five years, despite a remarkable surge in the semiconductor sector. Retail sales and facility investments, however, indicated some recovery, as per government data released on Friday.

The industrial output rose by only 0.5 percent compared to the previous year, a significant decline from the 1.5 percent increase seen in 2024, according to the Ministry of Statistics and Data, as reported by Yonhap news agency.

This figure represents the weakest growth since 2020, when industrial production faced a downturn due to the repercussions of the COVID-19 pandemic.

The mining and manufacturing sector, which is deemed the heart of the economy, reported a 1.6 percent growth in 2025, as stated by the ministry.

Remarkably, the output of chips surged by 13.2 percent year-on-year, driven by the increasing global demand spurred by the boom in artificial intelligence (AI).

"Semiconductors were the primary driver of growth in 2025," remarked Lee Doo-won, an official from the ministry. "We are witnessing a beneficial cycle with enhanced investments in semiconductor facilities and equipment."

Retail sales, a crucial gauge of private consumption, also saw a 0.5 percent increase from the previous year, marking a recovery after a decline last year.

After three years of diminishing consumption, private spending turned positive for the first time in four years.

This growth was particularly robust in the third quarter of 2025, fueled by the government's cash handouts known as consumption coupons, according to the ministry.

Growth was predominantly driven by higher sales of durable goods, such as passenger vehicles, which jumped by 4.5 percent year-on-year, as indicated by the data.

However, sales of semidurable goods, like clothing, fell by 2.2 percent, while sales of nondurable goods, including cosmetics, dipped by 0.3 percent.

Facility investment rose by 1.7 percent year-on-year in 2025, continuing its upward trend for a second consecutive year, bolstered by strong demand for transportation equipment and machinery related to chips.

Conversely, construction investment faced challenges, with construction orders declining by 16.2 percent compared to the previous year.

In December alone, industrial output increased by 1.5 percent from the preceding month, driven by robust demand for semiconductors and automobiles.

Retail sales advanced by 0.9 percent month-on-month, rebounding from a decline in November, supported by increased sales of clothing, food, and beverages.

On the downside, facility investment decreased by 3.6 percent, primarily due to a 16.1 percent drop in transport equipment, including ships and aircraft.