South Korea saw a simultaneous downward trend in consumption, investment, and industrial production in August 2025 despite the government’s all-out effort to revive consumption and investment via its expansionary fiscal policy.

According to data released by Korea Statistics on Tuesday, the retail sales index, an indicator of retail consumption, fell 2.4 percent in August from the previous month. The index had risen 2.5 percent in July due to the distribution of livelihood coupons, the sharpest increase in 29 months, but turned negative just one month later. This is the largest decline since February 2024 when it fell 3.5 percent.

The investment index, which had rebounded sharply in July, also declined again, while facility investment in August fell 1.1 percent from the previous month.

The all-industry production index, on the other hand, stagnated at 114.5 in August and was unchanged from the previous month.

Both job entries (first-time employment) and job changes during the cited period decreased for five consecutive months due to the economic downturn, leading to a prolonged stagnation in the labor market, the data showed.

According to the Ministry of Employment and Labor on the same day, the number of employees at establishments with one or more workers was 20,264,000 in August, a decrease of 17,000 from the same month a year ago.

The number of employees at business establishments began to decline in January 2025 for the first time in 46 months and has continued on a downward trajectory. The data particularly showed a simultaneous decline in both the construction index and the number of construction workers, which is attributable to the strengthened enforcement of the Serious Accidents Punishment Act.

Construction completion, which reflects construction investment, plunged 6.1 percent in August from the previous month. By industry, the number of employees in the construction sector fell by 83,000, continuing a decline for 15 consecutive months.

For its part, the manufacturing sector lost 19,000 workers, the largest drop since the COVID-19 pandemic.

Korea’s weak performance across all indicators – consumption, production, investment, and employment - presents a stark contrast to Taiwan, which is on a growth trajectory. Analysts note that policies such as reduced working hours and higher minimum wages, while leaving industrial restructuring unattended, contributed to Korea’s chronic low growth.

“Korea has a more diverse industrial base and a larger population than Taiwan, so it should have begun industrial restructuring at least six years ago but neglected to do so,” Hansung University professor of economics Kim Sang-bong said. “We are shortening working hours while the population is declining and setting the minimum wage uniformly, which should be determined by productivity across different industries. These actions are worsening our country’s growth rate.”

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