Hyundai Research Institute: “Korean Economy Expected to Grow 2.2% Next Year”

The Hyundai Research Institute has predicted that the Korean economy will grow by 2.2% next year, driven by a recovery in private consumption and facility investment.

According to the institute’s report, “2025 Korean Economic Outlook,” real gross domestic product (GDP) growth is expected to reach 2.2% next year. However, the growth rate is expected to be similar in both the first and second halves of the year, with the second half benefiting from a base effect.

Private Consumption and Investment

Private consumption is expected to rise by 2.0% next year, driven by improved consumer sentiment and employment conditions. Lower interest rates and increased household disposable income are also expected to contribute to the growth in private consumption.

Construction investment is expected to see improved conditions due to lower financing costs resulting from lower interest rates and a soft landing for real estate project financing (PF). However, the growth rate is expected to slow down to 0.6% compared to this year due to a decrease in the social overhead capital (SOC) budget and housing permits.

Exports and Facility Investment

The research institute projects that next year’s facility investment growth rate will be 3.8%, driven by an improvement in the capital procurement environment. Investment sentiment may pick up, leading to a recovery in facility investment.

Exports are expected to slow down to 5.0% next year, compared to 9.2% this year, due to the base effect caused by the large increase this year. However, the recovery in the global information and communications technology (ICT) sector is expected to contribute to the increase in exports.

Current Account Balance and Prices

The current account balance is expected to expand only slightly compared to this year due to the deterioration of the service balance.

Prices are expected to remain stable, rising only 2.1% next year, due to a weak domestic economic recovery and stabilizing import prices as a result of the strengthening of the won.

Unemployment Rate and Global Economy

The unemployment rate is expected to fall slightly to 2.7% next year, driven by increased manufacturing employment following increased exports and improved construction employment.

The global economy is expected to maintain a 3.0% growth trend next year, driven by improvements in the financial and investment environment, economic stimulus measures in major countries, and improvements in the manufacturing industry.