The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, August 2025” to promote a greater understanding of the Korean economy by providing readers with information on the latest economic trends and policy issues as well as relevant news and current events. 

The August publication provides updated information related to the overall Korea’s economy including Korean GDP in Q2 2025, extension of FX market trading hours, and inbound FDI in H1 2025.

Main content is as follows: 

[Economic Bulletin, August 2025]

[Current Economic Trends] 

1. Economic activity

2. Financial markets

3. Public finance

[Economic News Briefing]

- Korea’s GDP Grew by 0.6% in Q2 2025 (Advance Estimate)

- The Extension of FX Market Trading Hours: Progress Over the Past Year and Additional Improvement Measures 

- Inbound FDI posts US $13.1 billion in the first half of 2025

Overview

In May, industrial production, services production, facilities investment, and construction investment declined, while retail sales remained unchanged. In June, the number of employed persons increased and consumer prices rose at a faster pace.

In May, total production fell (down 1.1% m-o-m and down 0.8% y-o-y), as industrial production (down 2.9% m-o-m and up 0.2% y-o-y), services production (down 0.1% m-o-m and up 1.0% y-o-y), and construction (down 3.9% m-o-m and down 20.8% y-o-y) dropped.

In May, retail sales remained unchanged (0.0% m-o-m and down 0.2% y-o-y), and both facilities investment (down 4.7% m-o-m and up 7.5% y-o-y) and construction investment (down 3.9% m-o-m and down 20.8% y-o-y) fell.

In June, exports increased by 4.3 percent from a year ago and average daily exports increased by 6.8 percent compared to the previous year.

In June, the Consumer Sentiment Index (CSI) rose by 6.9 points month-on-month to 108.7. The Composite Business Sentiment Index (CBSI) decreased by 0.5 points to 90.2 in June, and the CBSI outlook for July declined by 0.1 points to 89.4.

In May, the cyclical indicator of the coincident composite index and the cyclical indicator of the leading composite index decreased by 0.4 points and 0.1 point, respectively.

In June, the number of employed persons grew by 183,000 jobs compared to the previous year and the unemployment rate fell by 0.1 percent point from a year ago.

In June, the Consumer Price Index (CPI) climbed by 2.2 percent year-on-year, driven by a higher petroleum product prices and a wider increase in processed food prices. The index when excluding food and energy prices increased by 2.0 percent. 

In June, Korean equity prices rose, yields for Korean Treasury Bond rose, and the Korean Won strengthened against the dollar.

In June, housing prices rose (up 0.14% m-o-m), while Jeonse (lump-sum deposits with no monthly payments) prices also rose (0.03% m-o-m).

Recently, the Korean economy has continued to face downward pressure, with delayed recovery in domestic demand – particularly in consumption and construction investment – and persistent employment challenges in vulnerable sectors. In addition, concerns over a slowdown in exports has grown amid worsening external conditions caused by U.S. tariff measures. However, some positive signs have emerged such as improving consumer sentiment. 

The global economy is facing sustained volatility in global financial markets and concerns over slower trade and growth, primarily due to the worsening trade conditions driven by tariff measures imposed by major economies.

The government will make every effort to swiftly implement the 31.8 trillion won supplementary budget aimed at revitalizing the economy and improving people’s livelihoods. It will also mobilize all available resources to ensure that the People’s Livelihood Recovery Consumption Coupons scheduled to be distributed on July 21 serves as a catalyst for boosting domestic demand, including household consumption and regional economies. At the same time, the government will fully commit to addressing trade-related risks, including providing support for Korean companies affected by U.S. tariffs.

If you have any inquiries, please feel free to contact us.

(KDI Economic Bulletin, +82-44-550-4170, sjung@kdi.re.kr)