The domestic machinery industry is expected to slightly decline in 2025 due to negative factors such as geopolitical risks and economic slowdown.

The Korea Institute of Machinery and Materials (President Ryu Seok-hyun) under the Ministry of Science and ICT announced the 118th Machinery Technology Policy, ‘Machine Industry Achievements in 2024 and Outlook for 2025,’ which contains the achievements and outlook for the domestic machinery industry.

According to this, the machinery industry in 2024 is expected to record KRW 150 trillion in production, a 2.8% decrease due to the economic downturn in the forward-looking industry.

Exports decreased slightly (0.8%) to $60.9 billion, while imports increased 3.8% to $53.8 billion.

In 2025, large-scale plant orders in the Middle East are expected to have a positive effect, but negative factors such as geopolitical risks and a prolonged construction recession are expected to have a greater effect, leading to a decline in both production and exports.

By industry, the cumulative order value for machine tools in the machine tool sector in 2024 decreased by 2.8% year-on-year, and exports decreased by 13.9% due to economic downturns in the United States and China, the major export markets. In 2025, production and exports are expected to decrease by 3-5% due to negative factors such as a global economic slowdown and the possibility of increased protectionism.

The plant sector saw a 12.9% increase in orders compared to the previous year due to the promotion of large-scale desalination power generation projects in the Middle East, and is expected to continue its boom in 2025 as orders for large-scale projects such as nuclear power plants are also expected.

The energy machinery sector saw a 24.9% year-on-year decrease in heating heater exports to Asia due to the slowdown in China's domestic market. Exports are expected to increase in 2025, centered on the US market.

The construction machinery sector is expected to record $5.17 billion in construction machinery exports in 2024, down 29.0% year-on-year due to the global construction recession. The construction recession is expected to continue in 2025, but large-scale infrastructure projects in India and increased demand for battery-related mining equipment are expected to act as positive factors.

The agricultural machinery sector recorded $880 million in 2024, down 20.1% year-on-year due to a sharp decline in exports to the U.S. In 2025, the sluggishness in the North American and European markets is expected to continue, resulting in an 8-9% decline, but a gradual recovery is expected from the second half of the year due to export diversification through the Ukraine reconstruction project.

Looking at the outlook for major industries, the semiconductor equipment market is expected to continue to grow in size in 2025 due to efforts to adjust supply and demand for semiconductors and recover demand. The display equipment sector is also expected to continue to grow due to the recovery in demand in upstream industries such as IT products.

The secondary battery sector is expected to record $5.42 billion in secondary battery exports in 2024, down 25.5% due to the sluggish electric vehicle market and the increase in China's battery self-sufficiency rate. Although exports and imports, domestic demand, and production of the secondary battery industry are expected to decline in 2025, the secondary battery equipment market is also expected to grow along with the recovery of the electric vehicle market starting in the second half of the year.

Gil Hyeong-bae, a senior researcher at the Korea Institute of Machinery and Materials’ Machine Policy Center, analyzed that “in 2025, the machinery industry will experience a mix of negative factors, such as the US-China trade conflict and geopolitical risks, and positive factors, such as expanded infrastructure investment in the Middle East.”

He added, “If the Trump administration is re-elected, it is expected that exports of key items will be affected due to strengthened protectionism.”