[Asia Economy Reporter Joo Sang-don] Due to the third wave of the novel coronavirus infection (COVID-19), domestic consumption in South Korea has sharply contracted, causing the domestic card approval amount in December to return to a decline after 8 months. The government recently assessed the Korean economic situation as "uncertainty in the real economy continues."
On the 15th, the Ministry of Economy and Finance announced the "Recent Economic Trends (Green Book) for January 2021," which included this information.
The Green Book comprehensively evaluated, "Recently, our economy has seen an expansion in export recovery, but due to the third wave of COVID-19 and strengthened social distancing measures, domestic demand has contracted, employment indicators have slowed, and uncertainty in the real economy continues."
The main reason the Ministry of Economy and Finance recently assessed that uncertainty in the Korean economy persists is that while industrial activity indicators increased, retail sales decreased, and the decline in employment numbers significantly widened. In fact, in November last year, production in the manufacturing and service sectors rose by 0.3% and 0.7% respectively compared to the previous month, resulting in a 0.7% increase in total industrial production. Exports in December also increased by 12.6% year-on-year, thanks to improvements in information and communication technology (IT) exports and an additional working day (+1 day). However, retail sales in November fell by 1.4% compared to the same month the previous year, and employment decreased by 628,000 in December, significantly expanding the decline.
In particular, the domestic card approval amount in December last year decreased by 3.3% compared to one year earlier, marking a decline again after 8 months since April (-5.7%). This was due to a larger decrease than the previous month (-3.9%) in department store sales, which fell by 14.1%, and a slowdown in the growth of online card sales. The year-on-year growth rate of online sales was 35.5% last year, then dropped to 26.6% in October and 19.2% in December.
The government plans to announce Lunar New Year livelihood measures this week. On the 15th, Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, said at the "2nd Innovation Growth Strategy Review Meeting, Policy Review Meeting, Korean New Deal Review Meeting, and 1st Price-related Vice Ministers' Meeting," "Considering the situation of our economy that has passed through the dark and long tunnel called COVID-19, the meaning of 'starting again' that Lunar New Year brings feels more precious and earnest than ever," and emphasized, "We will prepare Lunar New Year livelihood stabilization measures so that the new determination for this year's economic rebound can be more smoothly realized in the field of people's livelihood."
Vice Minister Kim added, "We will also strengthen efforts to create momentum for the economic rebound through the Lunar New Year holiday," and said, "We will mobilize all available policy tools, such as revitalizing traditional markets centered on non-face-to-face methods, so that small business owners and local merchants, who are deeply distressed, can feel the warm atmosphere of the holiday even a little."
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