Real Economic Uncertainty Continues as Consumption Slumps in Corona = South Korean Government Report

Diana 2021-12-06


The Ministry of Planning and Finance (MOF) of the Republic of Korea (ROK), in its February issue of the Greenbook (Economic Trends Report) released on January 19, commented on the recent economic situation in the ROK: "The manufacturing sector and investment improved, driven by a recovery trend in exports, but domestic demand continued to atrophy, particularly in the face-to-face service sector, due to the effects of the third wave of the new coronavirus epidemic and the tightening of quarantine measures. The report continued to refer to the "persistence of uncertainty in the real economy" from the January issue.

Consumption-related indicators remain sluggish: credit card spending in January fell 2.0% from the same month last year. Credit card spending in January fell 2.0% from a year earlier, the first decline in two consecutive months since March (-4.3%) and April (-5.7%) last year, when the effects of the new Corona began to be felt.

Department store sales in January were also down 6.7% from the same month last year. However, the decline was smaller than the previous month (-14.1%). Sales at discount stores turned negative by 12.4%. Internet shopping sales increased by 18.1%, but the growth rate was lower than the previous month (up 19.2%).

On the other hand, domestic sales of Korean-made passenger cars grew 20.9%, a significant improvement from the previous month (-8.4%). The Consumer Confidence Index (CSI, base value 100), a comprehensive measure of consumer sentiment toward economic conditions, also rose to 95.4.

The reemergence of the new corona infection has worsened the employment situation, with the number of workers in January falling by 982,000 from a year earlier, the largest drop since December 1998, when the Asian currency crisis hit.

The latest index of industrial activity for last December shows that production in the service sector declined by 1.1% from the previous month. Industrial production and capital investment increased.

In January this year, exports grew by 11.4% y-o-y on the back of an improvement in IT-related exports and an increase in the number of working days.