South Korea’s 2025 Industrial Output Hits Five‑Year Low While Chip Production Soars
Updated (6 articles)
Overall industrial growth slows to 0.5 % YoY South Korea’s total industrial production rose only 0.5 % year‑on‑year in 2025, the weakest expansion since 2020 when output contracted during the pandemic, according to Ministry of Statistics and Data figures released on Jan. 30, 2026 [1]. The modest rise follows a 1.5 % increase in 2024, indicating a clear deceleration in overall industrial momentum [1].
Mining and manufacturing sectors post modest 1.6 % increase Core industries of mining and manufacturing together posted a 1.6 % year‑on‑year gain in 2025, keeping them as the primary drivers of the Korean economy despite the broader slowdown [1]. Their continued expansion helped offset weaker performance in other industrial segments [1].
Semiconductor output jumps 13.2 % amid AI‑driven demand Chip production surged 13.2 % YoY in 2025, propelled by rising global demand linked to the artificial‑intelligence boom, ministry officials said [1]. The semiconductor boom generated a “virtuous cycle” of investment, reinforcing the sector’s outsized contribution to industrial growth [1].
Retail sales rebound, facility investment mixed, construction orders plunge Private consumption turned positive as retail sales rose 0.5 % in 2025, ending a four‑year slump, with durable goods such as passenger vehicles up 4.5 % YoY while clothing and cosmetics fell [1]. Facility investment grew 1.7 % YoY but slipped 3.6 % month‑to‑month, driven by a 16.1 % drop in transport equipment orders for ships and aircraft [1]. Construction orders fell sharply, down 16.2 % YoY, highlighting lagging investment in the building sector [1].
Timeline
2020 – South Korea’s industrial output contracts amid the COVID‑19 pandemic, marking the last time output fell before the 2025 slowdown [1].
Dec 3, 2024 – President Yoon Suk‑yeol declares martial law, triggering a sharp market sell‑off that pushes the won to multiyear lows and the KOSPI toward 2,300 points, the most abrupt economic shock in years [6].
Q1 2025 – GDP contracts 0.2 % as private consumption drops 0.1 %, prompting the IMF and Bank of Korea to cut 2025 growth forecasts to about 0.8 % [6].
June 2025 – Lee Jae‑Myung assumes the presidency and unveils a supplementary budget that later lifts Q3 GDP by 1.2 % and private consumption by 1.3 % [6].
July 2025 – The government disburses 150,000 won cash coupons to households, boosting consumer spending ahead of the Q3 rebound [6].
Sept 2025 – A second round of 100,000 won coupons reaches 90 % of citizens, further supporting the July‑Sept consumption surge [6].
Q3 2025 (Jul‑Sept) – Real GDP rises 1.3 % quarter‑on‑quarter, the fastest expansion since Q4 2021, driven by strong export demand for semiconductors and autos [5].
Q3 2025 (Jul‑Sept) – Gross regional domestic product climbs 1.9 % YoY, accelerated from 0.6 % in the prior quarter, with the Greater Capital Region’s mining and manufacturing output jumping 7 % on semiconductor production [3].
Q3 2025 (Jul‑Sept) – A 13 trillion‑won coupon program underpins growth, yet real household consumption falls 0.7 % and the won depreciates from ~1,360 to 1,470 per dollar, pushing inflation to 2.4 % above the year‑ago level [4].
Q3 2025 (Jul‑Sept) – Construction output continues to decline, falling 7.3 % YoY for the sixth straight quarter, though the pace eases from a 12.3 % drop in Q1 2025 [3].
Q4 2025 (Oct‑Dec) – GDP contracts 0.3 % quarter‑on‑quarter, the first contraction in six months and the weakest since late 2022, while annual growth remains at 1 % [2].
Jan 22, 2026 – The Bank of Korea forecasts 2026 growth at 1.8 %, citing a semiconductor up‑cycle, higher government spending and planned social‑overhead‑capital projects, including the construction of new semiconductor plants [2].
Jan 30, 2026 – Industrial output growth slows to 0.5 % YoY, the weakest since 2020, while semiconductor production surges 13.2 % YoY, mining and manufacturing rise 1.6 %, and retail sales climb 0.5 % after four years of decline [1].
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