South Korea's Economic Outlook

The Korea Development Institute (KDI) has maintained its projection for South Korea's economic growth rate this year at a modest 0.8 percent. Despite signs of recovery in consumer sentiment and the resolution of tariff negotiations under the new Lee Jae-myung administration, the construction sector's prolonged slump poses a significant threat to the national economy.

Construction Sector in Deep Slump

KDI's "Revised Economic Outlook" highlights a delayed recovery in construction investment, with this year's growth rate forecasted to plummet to -8.1 percent. This marks the worst performance since the 1998 Asian financial crisis, attributed to safety accidents halting projects and the slow normalization of real estate project financing (PF).

Government and Expert Concerns

President Lee Jae-myung has condemned recent fatal industrial accidents, equating cost-cutting at the expense of safety to "social homicide." Experts warn that without immediate action to revive the construction sector, the government's goal of achieving a 1-percent growth rate is at risk, potentially affecting tax revenues and fiscal planning.