"Lackluster sentiment may persist for a while if focus remains on headwinds. Indeed, the relative strength of [the Korean won] vis-a-vis [the Japanese yen] is a serious source of concern," Mizuho Bank analysts wrote in a note.
"However, we expect Korea's economy to remain resilient on three supportive factors. As such, the lagged effects of the monetary and fiscal stimulus should translate in the data in the next quarters," they said.
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"There is a strong chance that [Bank of Korea] may lower its policy rate further (by 25bps to 1.75 percent) to boost consumer and business confidence while at the same time aiming at anchoring inflation expectations," it added. "Overall, we expect GDP to experience a mild pick-up to 3.4 percent [year-on-year] this year, followed by a stronger rebound to 3.9 percent in 2016."
A 9.2 percent on quarter decline in construction spending underlay slower economic growth. Construction spending expanded 2.5 percent in the previous quarter.
However, a 5.6 percent on-quarter increase in capital investment provided some support, rebounding after a 0.5 percent contraction in the third quarter.
For 2014, the economy expanded 3.3 percent, faster than the 3.0 percent posted in 2013.