South Korea's industrial output grew at the slowest pace in five years in 2025, despite robust performance in the semiconductor sector. Retail sales and facility investment showed signs of improvement, according to government data.
South Korea's industrial output increased by 0.5 percent year-on-year in 2025, down from 1.5 percent the previous year, marking the weakest growth since 2020 when production contracted due to the COVID-19 pandemic. According to data from the Ministry of Statistics and Data, mining and manufacturing output, the economy's backbone, rose 1.6 percent, with semiconductor production surging 13.2 percent amid rising global demand driven by the artificial intelligence boom.
"Semiconductors strongly drove growth in 2025," said Lee Doo-won, a ministry official. "We saw a virtuous cycle with expanded investment in semiconductor facilities and equipment." Retail sales, a key gauge of private consumption, climbed 0.5 percent year-on-year, rebounding from a decline and marking the first positive growth in four years after three years of shrinkage. The uptick was led by a 4.5 percent jump in durable goods sales, such as passenger vehicles, though semidurable goods like clothing fell 2.2 percent and nondurable goods including cosmetics dipped 0.3 percent. Growth was particularly strong in the third quarter, fueled by government consumption coupons.
Facility investment advanced 1.7 percent for the second straight year, supported by demand for transportation equipment and chip-related machinery. However, construction investment weakened, with orders dropping 16.2 percent. In December, industrial output rose 1.5 percent month-on-month, driven by semiconductors and automobiles, while retail sales increased 0.9 percent, rebounding from November's decline. Facility investment, however, fell 3.6 percent, largely due to a 16.1 percent drop in transport equipment like ships and aircraft.
These figures highlight a manufacturing-led recovery in South Korea's economy, tempered by ongoing challenges in construction.
