Bank of Korea
South Korea's economy grows 1 percent in 2025
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South Korea's gross domestic product grew 1 percent in 2025 from the previous year, according to Bank of Korea data, but the fourth quarter saw an unexpected 0.3 percent contraction. Strong exports drove the annual figure despite weakness in construction. This marks half the 2 percent expansion of 2024.
Foreign currency deposits in South Korea rose for a second consecutive month in December, hitting an all-time high amid weakness in the won. According to Bank of Korea data, outstanding deposits held by residents reached $119.43 billion, up $1.59 billion from the previous month. The surge reflects increased dollar holdings by companies and individuals due to currency volatility.
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Major financial institutions have raised their 2026 inflation forecasts for South Korea, citing the continued weakness of the Korean won against the U.S. dollar. According to Bloomberg's compilation from 37 institutions, the median projection stands at 2 percent, up 0.1 percentage point from 1.9 percent at the end of last month. The Bank of Korea has also warned that consumer inflation could reach the mid-2 percent range if the domestic currency remains weak.