Crisis Management for a Conflict with North Korea
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치솟은 환율에 韓 '달러 GDP' 올해 뒷걸음질
Soaring Exchange Rate Causes South Korea's Dollar GDP to Decline This Year
Hankyung | Local Language | News | Dec. 1, 2025 | UndeterminedEconomic Growth
South Korea's gross domestic product (GDP) converted into U.S. dollars is projected to contract by 0.9% this year, falling from $1.8754 trillion last year to an estimated $1.8586 trillion, according to the International Monetary Fund (IMF). This decrease is primarily due to the won–dollar exchange rate rising sharply, which has outweighed nominal GDP growth in won terms. Over the past two years, dollar GDP has essentially stagnated, increasing only 0.7% from $1.8448 trillion in 2023.
In local currency terms, nominal GDP is expected to grow by 2.1%, driven by real economic growth of 0.9% after adjusting for price factors. The average won-dollar exchange rate from January to November 2025 was 1,418 won per dollar, up 4% from 1,364 won the previous year. With the exchange rate nearing 1,500 won, the annual average might rise further by the year-end, exerting downward pressure on dollar GDP figures.
The exchange rate is becoming a critical factor for South Korea's economic metrics and targets, potentially delaying milestones such as reaching $2 trillion in GDP and attaining a per-capita GDP of $40,000, which were expected within the next few years. The won's depreciation is influenced by interest-rate differences with the U.S., excess market liquidity, and the weakening Japanese yen. On the supply side, foreign investments by Korean individual investors ("Seohak ants"), the National Pension Service's overseas investments, and exporters delaying dollar conversions are contributing to the higher exchange rate, which appears to be beyond the control of policy authorities.