Real value added generated by manufacturers rose 2.3 percent, or 14.5 trillion won, ($10 billion) from a year earlier to 632.4 trillion won in 2025, according to the National Assembly Budget Office’s Economic Overview of the Republic of Korea 2026.
The sector expanded for a third consecutive year, although the annual increase slowed to about half of the 28.6 trillion won recorded in 2024.
Manufacturing’s share of real GDP also rose for a third year to 27.2 percent, the highest in data reviewed by the budget office covering the period since 2016.
Manufacturing value added has increased from 498.4 trillion won in 2016, producing average annual growth of about 2.7 percent through last year.
That outpaced the roughly 2.3 percent annual expansion in real GDP over the same period, lifting manufacturing’s weight in Asia’s fourth-largest economy.
The headline increase, however, masked a growing concentration of industrial activity in a narrow section of the economy.
Computers, electronic and optical products accounted for 37.4 percent of manufacturing value added last year, up 14.7 percentage points from 22.7 percent in 2016.
The budget office said the sector’s share had risen over the past three years, reflecting a structural shift towards semiconductor-led electronics production.
By contrast, the relative contributions of transport equipment, machinery and chemicals have either declined or remained broadly stagnant, pointing to a widening gap between electronics and more traditional manufacturers.
South Korea’s reliance on manufacturing is also pronounced by international standards.
Manufacturing accounted for 27.4 percent of Korean GDP in 2024 on an OECD-comparable basis, the second-highest share among member countries after Ireland’s 31.1 percent.
The figure was well above Germany’s 19.9 percent and Japan’s 19.0 percent, and exceeded the OECD average of 15.2 percent by 12.2 percentage points.
The budget office said high-technology industries, including semiconductors and displays, remained particularly important to South Korea because of the economy’s heavy reliance on manufactured exports.
Maintaining the country’s existing technological lead while strengthening the competitiveness of those industries would therefore remain a central economic challenge, it said.
The broader report said the Korean economy was gradually emerging from last year’s weakness on the back of semiconductor exports and a recovery in domestic demand, while warning that external uncertainty, demographic change and entrenched low growth continued to pose risks.
Copyright ⓒ Aju Press All rights reserved.