South Korea construction output posts steepest fall since 1998 crisis

Construction equipment stands at a construction site in the central city of Sejong, South Korea. Photo by YONHAP / EPA

Aug. 28 (Asia Today) — Construction work completed by South Korean companies fell at the fastest rate since the Asian financial crisis as high interest rates and rising construction costs continued to weigh on projects.

The value of construction completed in 2025 totaled 335 trillion won (about $248.8 billion), down 29 trillion won (about $21.02 billion), or 7.9%, from the previous year, according to preliminary construction industry survey data released Friday by the National Data Agency.

It was the largest annual decline since the 12.9% drop recorded in 1998 during the Asian financial crisis.

The downturn largely reflected a 12.1% plunge in construction contracts in 2023 as high borrowing costs and inflation disrupted the industry.

Construction contracts typically take about 12 to 18 months to translate into actual construction activity, meaning the effects of the 2023 “contract cliff” became fully visible in last year’s figures.

Domestic construction totaled 297 trillion won, down 19 trillion won (about $13.77 billion), or 6%, marking its largest decline since 1998.

Building construction fell 8% to 212 trillion won (about $153.66 billion), while civil engineering construction dropped 2% to 47 trillion won (about $34.07 billion).

Construction commissioned by the public sector rose 3% to 92 trillion won (about $66.68 billion), but private-sector work fell 9.5% to 204 trillion won, dragging down overall performance.

Overseas construction also declined sharply, falling 20.8% to 38 trillion won (about $27.54 billion). It was the largest decrease since a 29% drop in 2017.

The country’s 100 largest construction companies completed 106 trillion won (about $76.83 billion) of work, down 8.2% from a year earlier. They accounted for 31.7% of total construction output.

Construction contracts totaled 307 trillion won (about $222.5 billion) in 2025, down 0.4%.

The decline was driven largely by overseas contracts, which fell 28.1% to 30 trillion won (about $21.74 billion).

Domestic construction contracts, however, increased 4% to 277 trillion won (about $200.76 billion).

Because construction activity typically follows contracts with a lag, the recovery in domestic orders could support an improvement in construction output in coming periods.

— Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260828010009807