BOK draws attention over whether to cut key rate on Thursday The slump in the construction industry is expected to drag Korea’s growth rate down to 0.9 percent this year, offsetting gains in domestic demand and a smaller-than-expected deceleration due to eased U.S. tariffs, industry officials said Sunday.

In its recently revised economic outlook, the government projected real gross domestic product (GDP) growth in 2025 at 0.9 percent, signaling the start of a prolonged low-growth era.

The downgrade was driven primarily by a bleak construction sector. Government projections show investment in the sector shrinking 8.2 percent in 2025, following a 3.3 percent decline last year, as the recovery remains sluggish.

In contrast, private consumption, a long-standing concern, has rebounded and is forecast to grow 1.3 percent this year, up 0.2 percentage points from 2024. It was supported by government-issued vouchers aimed at boosting household spending.