The total value of construction completed in the first quarter fell 21.2 percent year-on-year to 26.87 trillion won (approximately $19.5 billion), according to data released Thursday by the Korea Research Institute for Construction Policy.
With the industry employing millions nationwide, the latest downturn is raising alarms about broader economic ripple effects and the potential drag on employment.
“While we anticipated a slowdown in private construction, we expected government spending to partially offset the losses,” said Park Sun-gu, head of the institute’s economic and financial research division. “Instead, we’ve seen steep declines across all segments — public, private, civil engineering, and buildings — through April. Both current and leading indicators are now markedly weak.”
The dismal figures follow the Bank of Korea’s downward revision of its 2025 economic growth forecast earlier this month, cutting the outlook to just 0.8 percent, citing a drop in household consumption and persistent weakness in construction.
The sector’s downturn has worsened progressively over the past year, with quarterly contractions intensifying from 4 percent in the first quarter of 2024 to 9.7 percent in the fourth quarter, before plunging into double-digit territory in early 2025.
Leading indicators suggest little relief ahead. Between January and April, the total permitted building area declined 21.4 percent, while the area of construction commencement shrank 22.5 percent. New construction orders also fell by 4.3 percent, signaling sustained sluggishness for the remainder of the year.
Industry analysts warn that any recovery will likely be protracted and uneven, with gains concentrated in certain regions or sectors rather than across the board. A full rebound may not begin until next year, they said.
Park urged targeted government intervention, including supplementary budgets focused on supporting smaller contractors and regional markets rather than large, Seoul-based firms, in order to address what he described as growing polarization within the industry.
The sector's current woes are particularly striking given the typically stable nature of construction completion metrics, which rarely exhibit such dramatic quarterly swings.
reporter
Kim Dong-young
davekim0807@ajupress.com
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