Korean Government Expands SOC Investment to Boost Economy
In response to economic downturn and declining growth rates, the government has significantly increased investment in social overhead capital (SOC). In the first preliminary feasibility test (Preliminary Feasibility Test) of the year, projects worth KRW 8.7 trillion were approved, marking a more than twelvefold increase compared to the same period last year. Additionally, the government plans to execute KRW 12 trillion—equivalent to 70% of this year’s SOC budget—during the first half of the year.
Expansion of SOC Projects and Key Developments
On the 23rd, the Ministry of Economy and Finance (MOEF) held the 2025 1st Fiscal Project Evaluation Committee, where SOC projects totaling KRW 8.7175 trillion passed the preliminary feasibility test. Major approved projects include:
- Yeongwol-Samcheok Expressway Construction (KRW 5.6167 trillion)
- Incheon-Seoul Underground Expressway Construction (KRW 1.378 trillion)
- Hyeongsangang River Environmental Improvement Project (KRW 802.8 billion)
- Seohae Line–Gyeongbu High-Speed Railway Line Connection Project (KRW 729.9 billion)
- Daegu Hwanggeumdong–Beoman Intersection Road Construction (KRW 198.1 billion)
These projects, long-awaited by local communities, are expected to bring significant economic benefits to the respective regions.
In particular, the Yeongwol-Samcheok Expressway Construction is a long-standing project of 28 years in the southern Gangwon region, with the core plan being the construction of a four-lane highway. According to the Gangwon Research Institute, this project is expected to generate KRW 16.3 trillion in economic impact and create 47,000 jobs. Meanwhile, the Incheon-Seoul Underground Expressway is also a high-priority project for Incheon residents. The city plans to enhance cooperation with relevant institutions to expedite the process.
70% of SOC Budget to Be Spent in the First Half of 2025
To stimulate economic recovery, the government will swiftly allocate KRW 12 trillion, or 70% of this year’s SOC budget, in the first half of the year. This includes KRW 4.2 trillion for road projects and KRW 4.1 trillion for railway projects, with KRW 2.5 trillion and KRW 2.1 trillion set to be spent in the first quarter, respectively.
Public institutions will also accelerate their budget execution. The Korea Land and Housing Corporation (LH) plans to spend KRW 12.3 trillion, the Korea National Railway (KR) KRW 3.5 trillion, and the Korea Expressway Corporation (KEC) KRW 2.7 trillion in the first half of the year. A Ministry of Land, Infrastructure and Transport (MOLIT) official stated, "This is the largest early execution plan in history. We will ensure rigorous monitoring to maximize the economic stimulus effect."
Acceleration of Railway Undergrounding and Regional Development
The government is also expediting railway undergrounding projects. By the first quarter of this year, consultations will be completed with local governments that have applied for the first phase of the railway undergrounding project, with selection results announced in March. Following an additional round of applications in May, a comprehensive nationwide "Railway Undergrounding and Integrated Development Master Plan" will be established by the end of the year.
Additionally, various projects aimed at regional economic revitalization are being promoted. The government plans to introduce a "Vacant House Revitalization Plan" in the first half of the year and expand the "Regional Vitality Town" program from 18 to 22 locations, selecting 10 new projects in May. To boost regional tourism through railway services, the "Local Love Railway Tour" program will be expanded from 23 to 28 locations, and a "Suburban Line Free Travel Pass" will be introduced.
SOC Investment Expansion Amid Construction Sector Downturn
The government's push for SOC investment comes amid a slump in the construction sector, which has negatively impacted economic growth and employment. Last year, construction investment growth recorded -2.7%, and according to the Bank of Korea, this contributed to a 0.4 percentage point decline in the country’s economic growth rate. The number of construction workers also decreased by 49,000, marking the largest decline since 2013.
A Ministry of Economy and Finance official stated, "While discussions on a supplementary budget (extra budget) are ongoing, the government’s top priority is to boost the economy through the rapid execution of the SOC budget." The impact of SOC investment expansion on economic recovery remains to be seen.
