South Korea's economy barely grows in Q4 amid political chaos

By Jihoon Lee

SEOUL (Reuters) -South Korea's economy barely grew in the fourth quarter of 2024, missing market expectations, as domestic demand was hurt by the country's worst political crisis in decades, advanced central bank estimates showed on Thursday.

Gross domestic product (GDP) expanded 0.1% from a quarter earlier on a seasonally adjusted basis, compared with increases of 0.1% in the third quarter and 0.2% forecast in a Reuters survey.

In December, consumer and business sentiment dampened amid political chaos, after President Yoon Suk Yeol was impeached and suspended from duties over his short-lived bid to impose martial law, followed by the impeachment of Prime Minister Han Duck-soo.

For the quarter, consumer spending rose 0.2% and corporate investment grew 1.6%, weaker than the previous quarter's gains of 0.5% and 6.5%, respectively, while construction investment fell 3.2%.

Exports rose 0.3%, recovering from their fall of 0.2% a quarter earlier, led by sales of semiconductors on robust demand for artificial intelligence.

South Korea's central bank is expected to lower interest rates next month, after its unexpected rate hold this month to prevent the won - which weakened the most among Asian currencies last year - from falling further.

In the October-December quarter, GDP grew 1.2% on an annual basis, weaker than gains of 1.5% the quarter before and 1.4% expected by economists, and marked the slowest pace since the second quarter of 2023.

In 2024, Asia's fourth-largest economy grew 2.0%, after rising 1.4% in 2023, according to the Bank of Korea.