South Korea growth misses forecast, GDP shrinks 0.2%

South Korea’s economy contracted 0.2% in the first quarter of 2025 from the previous quarter, marking its first on-quarter decline in nine months, according to Bank of Korea data. GDP also shrank 0.1% year-on-year, reversing from 1.2% growth in the prior quarter, as domestic political turmoil and global trade tensions weighed on sentiment. The downturn followed former President Yoon Suk Yeol’s imposition of martial law in December, which was lifted after his removal from office in April. Exports fell 1.1% amid weaker shipments of chemicals and machinery, while construction and facility investment declined 3.2% and 2.1%, respectively. Consumer spending dipped 0.1%, and government expenditure also edged lower. The central bank warned its earlier 1.5% growth forecast may be overly optimistic.