Regional Economic Gap Widens: Service Sector Dominates in Metropolitan Area, Manufacturing Dependence Deepens in Non-Metropolitan Regions

"Regional Economic Trends for Q3 2025"
Service Sector: Seoul Up 6.1%, Gyeonggi Up 4.9%

The trend of industrial imbalance between regions continues. While the Seoul metropolitan area is experiencing growth driven by the service sector, non-metropolitan regions are becoming increasingly dependent on manufacturing.

According to the "Regional Economic Trends for the Third Quarter of 2025" released by the National Data Office on November 17, nationwide mining and manufacturing production increased by 5.8% in the third quarter compared to the same period last year. North Chungcheong Province (19.1%), Gyeonggi Province (15.9%), and Gwangju (14.6%) saw increases thanks to strong production in semiconductors, electronic components, and electrical equipment. In contrast, Seoul recorded a decrease of -8.6%. Although the decline narrowed compared to the previous quarter (down 10.1%), the city still experienced negative growth. South Jeolla Province (-5.4%) and Jeju (-4.2%) also saw decreases in mining and manufacturing production.

The growth trend in the service sector became even more pronounced in the metropolitan area. The service sector production growth rates were 6.1% in Seoul, 5.3% in Ulsan, and 4.9% in Gyeonggi Province, all exceeding the national average of 3.1%. In particular, Seoul saw significant expansion in growth compared to the second quarter, with strong performances in information and communications, finance, and wholesale and retail sectors. On the other hand, Jeju (-8.2%), South Jeolla Province (-0.8%), and South Gyeongsang Province (-0.3%) recorded declines, solidifying the structural gap between regions.

Since the crisis, companies have raised prices on 53 processed food items including coffee, bread, frozen foods, and ramen, causing a surge in "table prices." Many analysts believe that companies had restrained price increases to cooperate with the government's price stabilization measures but raised product prices massively during the government’s administrative vacuum. The photo shows the processed food section of a large supermarket in Seoul on June 10, 2025. Photo by [Photographer's Name]

Despite growth in manufacturing, non-metropolitan regions are also experiencing a slowdown in the service sector. North Chungcheong Province saw improvements in both manufacturing (19.1%) and service sector production (3.6%), but Jeju and South Jeolla Province underperformed in both mining and manufacturing as well as services. In line with this, consumer recovery in some regions has also been limited.

In the third quarter, nationwide retail sales increased by 1.5%, breaking away from the stagnation seen in the second quarter. Sejong (8.8%), Incheon (5.5%), and Daegu (5.3%) recorded increases due to strong sales of passenger cars and fuel. In contrast, Seoul (-2.7%), Jeju (-1.3%), and North Jeolla Province (-1.0%) saw declines, with sales dropping mainly at duty-free shops, large supermarkets, and convenience stores. In the case of Seoul, despite the growth in the service sector, the recovery of demand in offline distribution channels has been sluggish.

The trend in construction orders showed even greater regional disparities. Nationwide construction orders increased by 26.5%, reversing the decline in the second quarter (down 5.4%). North Chungcheong Province (104.4%), Seoul (68.1%), and Busan (45.9%) saw high growth rates due to increased orders for factories, warehouses, and housing. On the other hand, Jeju (-69.7%), Gangwon (-60.0%), and Sejong (-49.4%) shifted to declines due to the absence of large-scale project orders. In the third quarter, Daegu's growth rate was significantly lower than the second quarter (371.1%), reaching only a 3.9% increase.

Employment indicators continued to improve. The national employment rate was 63.5%, up 0.2 percentage points from the same quarter last year. Daejeon (up 2.2 percentage points), North Chungcheong Province (up 1.5 percentage points), and North Gyeongsang Province (up 1.5 percentage points) saw increases, while Sejong (down 1.0 percentage point), Gyeonggi Province (down 0.7 percentage point), and Incheon (down 0.7 percentage point) experienced decreases. By age group, employment rates for those aged 60 and above, as well as those in their 30s and 40s, increased, while employment among young people aged 15 to 29 showed significant regional differences.

The consumer price inflation rate remained stable at 2.0% nationwide. South Gyeongsang Province (2.2%), Busan and Ulsan (2.1%) slightly exceeded the national average, while Jeju (1.7%), Gwangju (1.7%), and Daegu (1.8%) were relatively lower.

This content was produced with the assistance of AI translation services.