Analysis indicates that the South Korean economy, after experiencing about three years of downturn, has recently shown signs of recovery. This analysis is based on the simulation results of an artificial intelligence model, suggesting that the contraction period since 2022 may have ended in September of this year, transitioning to a period of expansion.
Kim Hyun-tae, a researcher at the Korea Financial Research Institute, stated in a report released on December 21, 2025, that to track the economic trends since May 2020, a machine learning-based analysis technique called "Learning Vector Quantization" was used to diagnose economic trends. This analysis comprehensively utilized various economic-related indicators, including the leading economic index (a composite indicator of real economic variables) and consumer and business sentiment indices.
According to this analysis, the South Korean economy entered a contraction phase after reaching its peak in November 2022, followed by a slowdown period lasting approximately 34 months, until it recently entered a recovery phase with a low point expected in September-October 2024. This surpasses the previous longest cycle of 32 months in the 11th round and shows characteristics similar to the 8th round cycle (2001-2005), where the expansion period was shorter than the contraction period.
The official economic cycle of South Korea follows the benchmark cycle dates released by the National Statistical Office (formerly known as the Statistics Bureau), but this data typically has a publication lag of about three years, making real-time responses difficult, a limitation that has drawn criticism. Therefore, the technical supplements conducted by private research institutions to capture rapid changes in the real economy are particularly important.
The prediction accuracy of the algorithm used by researcher Jin is approximately 91.5%. Compared to historical economic fluctuations, the maximum errors in forecasting peaks and troughs are 6 months and 4 months, respectively. However, he added that since data after November of this year has not yet been reflected, it is necessary to confirm that the expansion phase lasts at least 3 months before making a formal determination of the economic cycle transition.
This analysis may have a significant impact on future economic decision-making processes. If the possibility of economic recovery is confirmed, the government and the Bank of Korea may consider adopting a more proactive expansionary route in terms of interest rate policy, fiscal operations, and so on. However, given that it is based on private estimates, subsequent data and government interpretations are still needed for corroboration.