Home > Business > Economy

Nominal GDP projected to grow — but not in dollars as won keeps tanking

Published: 30 Nov. 2025, 16:53 Updated: 30 Nov. 2025, 17:31

Dollar and won bills are stacked on a pile inside a Hana Bank central Seoul branch on Nov. 25. [NEWS1]

Korea’s nominal GDP is projected to grow 2.1 percent this year in won terms. However, due to record weakness, the country’s GDP by U.S. dollars — used for global comparisons — seems to have contracted 0.9 percent, according to the International Monetary Fund (IMF).

In its latest annual consultation report released Sunday, the IMF estimated Korea’s nominal GDP for 2025 at $1.86 trillion, down $16.8 billion, or 0.9 percent, from $1.88 trillion in 2024. Compared to 2023, when dollar-denominated GDP stood at $1.84 trillion, the two-year increase amounts to just $13.8 billion, or 0.7 percent — reflecting near-stagnant growth.

By contrast, Korea’s nominal GDP in won is expected to rise to 2.61 quadrillion won, up 2.1 percent from 2.56 quadrillion won in 2024. Nominal GDP reflects the headline growth rate without adjusting for inflation and typically rises with higher prices, even if real production remains flat.

This year, the Korean economy has suffered from an unusually undervalued won. As of the end of November, the average exchange rate for the year stood at 1,417.68 won per dollar — weaker than the previous record of 1394.97 won in 1998 during the aftermath of the Asian financial crisis. The average rate has increased 54.3 won, or 4 percent, from last year’s 1,364.38 won. In November alone, the monthly average reached 1,460.44 won per dollar, the highest since March 1998.

With the won continuing to weaken, analysts warn that Korea’s long-anticipated milestone of a $2 trillion economy could be delayed. The same goes for the country’s goal of reaching $40,000 in per capita GDP, which had been expected by 2027. Even as the GDP continues to grow in won terms, a strong dollar may overwhelm those gains when converted to the greenback.

Political instability last December — including the declaration of martial law and the impeachment of President Yoon Suk Yeol — contributed to greater exchange rate volatility.

The IMF noted in its report that while exchange rate fluctuations are unlikely to pose a major economic risk on their own, liquidity in the foreign exchange market may temporarily thin and currency movements may become more pronounced in periods of heightened uncertainty in global financial markets.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM KYUNG-HEE [[email protected]]