It was the lowest growth in six years, after expanding 3.1 percent in 2017, according to the Bank of Korea (BOK).
Investment in the construction sector declined 4 percent, the biggest fall in 20 years. Facility investment dipped 1.7 percent, the lowest in nine years.
Private consumption climbed 2.8 percent last year, the fastest increase in seven years. The government expenditure advanced 5.6 percent, the highest in 11 years.
Export, which accounts for about half of the export-driven economy, gained 4 percent, the highest in five years.
The real GDP expanded 1 percent in the fourth quarter from three months earlier, after growing 0.6 percent in the third quarter.