Regional Economic Growth Rate Remains in 0% Range for Second Consecutive Quarter... Construction Industry Continues Double-Digit Decline

Mining and Manufacturing Improve Due to Semiconductor Export Increase... Service Industry Also Showing Recovery

Construction Industry (PG) [Illustration and composite photo by Jo Hye-in, Lee Tae-ho, Choi Ja-yoon]

With the prolonged downturn in the construction industry, regional economic growth has remained in the 0% range for two consecutive quarters.

According to the '2nd Quarter 2025 Real Gross Regional Domestic Product (GRDP)' released by Statistics Korea on the 26th, the overall regional economic growth rate in the second quarter of this year recorded 0.4%. Although there was a slight improvement from the previous quarter (0.1%), it remained below 1% for two consecutive quarters, indicating a continued slump.

By region, the Seoul Metropolitan Area (1.6%) and the Daegu-Gyeongbuk Area (0.1%) showed a slight increase, while the Honam Area (-2%), the Dongnam Area (-1.0%), and the Chungcheong Area (-0.4%) recorded negative growth.

The slump in regional economic growth was largely attributed to the downturn in the construction market.

Construction industry GRDP in the second quarter decreased by 10.8% compared to the same period last year.

This is the second-largest decline since the first quarter (-12.4%), which recorded the lowest figure since statistics began in 2015.

Although the decline narrowed slightly compared to the previous quarter, a double-digit negative growth continues.

Construction industry GRDP has shown a downward trend for five consecutive quarters since the second quarter of 2024, with double-digit decreases continuing particularly this year.

By region, the decline was most pronounced in the Daegu-Gyeongbuk Area (-18.5%) and the Honam Area (-15.6%). The Seoul Metropolitan Area (-9.5%), the Dongnam Area (-8.1%), and the Chungcheong Area (-8.0%) also recorded negative figures.

By province/city, the largest decreases were seen in Daegu (-20.3%), Jeonnam (-18.1%), Gyeongbuk (-17.5%), Jeju (-17.2%), Gwangju (-15.3%), and Sejong (-15.2%). Busan (-3.1%), Seoul (-3.7%), and Incheon (-5.9%) showed relatively smaller declines.

In contrast, mining and manufacturing GRDP increased by 2.0%, with an expanded growth rate compared to the previous quarter (0.4%).

Statistics Korea explained that this is largely due to increased exports related to memory semiconductors.

While the Seoul Metropolitan Area (4.5%) and the Daegu-Gyeongbuk Area (4.4%) showed growth driven by increased production of semiconductors and electronic components, the Dongnam Area (-1.7%) and the Honam Area (-1.5%) declined.

Service industry GRDP also increased by 1.2% compared to the previous quarter, showing a growth rate double that of the prior quarter (0.6%).

Notably, wholesale and retail, which had recorded negative growth for eight consecutive quarters since the second quarter of 2023, turned positive (0.6%).

The Seoul Metropolitan Area (1.8%), Chungcheong Area (1.2%), and Dongnam Area (1.0%) saw increased production, primarily in finance/insurance, public administration, and health/welfare.

Conversely, the Daegu-Gyeongbuk Area (-0.3%) and the Honam Area (-0.2%) recorded negative growth due to a contraction in real estate and business services, showing regional disparities. Yonhap News