S.Korea Sees Growth Slowing to 1.8% in 2025, Unveils Stimulus Plan

Sejong, South Korea—The Ministry of Economy and Finance announced its economic policy directions for 2025 on Thursday. 

The ministry projects slower growth amid mounting domestic and external challenges.

The government forecasts economic growth to decelerate to 1.8% in 2025 from an estimated 2.1% in 2024, citing sluggish domestic demand and slowing export growth. 

The inflation rate is expected to ease to 1.8% in 2025 from 2.3% in 2024, supported by declining international oil prices.

Employment growth is projected to moderate. Only 120,000 new jobs are expected to be created in 2025, a decrease from the previous year.

To counter these headwinds, the government unveiled a comprehensive economic package centered on four key pillars: supporting people's livelihoods, managing external creditworthiness, addressing trade uncertainties, and enhancing industrial competitiveness.

The ministry plans to mobilize KRW 18 trillion in available resources through expanded fund projects and increased investments in public institutions. 

The government aims to achieve a record-high 67% execution rate for planned projects in the first half of 2025. 

During this period, 70% of the KRW 85 trillion allocated to key sectors will be disbursed.

Immediate measures include temporary reductions in automobile consumption tax during the first half of 2025 and the distribution of one million accommodation vouchers for non-metropolitan areas to stimulate consumption.

The government will provide KRW 11 trillion in policy financing for low-income households and implement additional tariff quotas on several food items. 

The package also includes expanded eligibility for the New Start Fund, which assists struggling business owners with loan repayment adjustments.

In response to global trade uncertainties, the ministry will strengthen supply chain management and provide increased liquidity support to export companies. 

The government will also focus on bolstering the semiconductor ecosystem and developing strategies for the automotive and battery industries to address potential U.S. tariff increases.

The ministry said it will reassess economic conditions in the first quarter of 2025 and consider additional support measures if necessary.