October Card Approval Amount Increases 10.4%, Up for 9 Consecutive Months
Recovery to Pre-COVID Levels in Accommodation and Food Services Still Uncertain
[Asia Economy Reporter Ki Ha-young] Despite the 4th wave of COVID-19, card usage amounts have increased for nine consecutive months. However, industries mainly staffed by self-employed workers, such as lodging and restaurants, which were hit hardest by COVID-19, have not recovered to pre-pandemic levels.
According to the Credit Finance Association's Credit Finance Research Institute on the 1st, the total card (credit, debit, prepaid cards) approval amount in October reached 85.4 trillion KRW. This is a 10.4% (8.1 trillion KRW) increase compared to the same period last year. During the same period, the number of approvals also grew by 12.3% (230 million transactions), reaching 2.11 billion transactions. This marks double-digit growth for two consecutive months following last month.
Card approval amounts have shown an increasing trend for nine consecutive months since February. This is attributed to improved consumer sentiment due to expanded vaccination, as well as policy effects such as the Win-Win National Support Fund and Win-Win Consumption Support Fund (credit card cashback).
However, when looking at each industry, it is difficult to say that recovery to pre-COVID-19 levels has been achieved. In particular, lodging, restaurants, and travel industries, where self-employed workers mainly operate, have shown negative growth compared to October 2019, before the outbreak of COVID-19.
During the same period, card approval amounts for lodging and restaurants increased by 4.2% year-on-year to 10.58 trillion KRW. However, compared to October 2019, before COVID-19, it actually decreased by 5.7%. This is due to reduced consumption related to travel, movement, and company dinners amid the COVID-19 impact.
The travel industry showed the weakest recovery. Business facility management and business support services, which include travel agencies and travel assistance services, recorded 300 billion KRW, a 23% increase during the same period. However, compared to 2019, this is a sharp decline of 30.2%. The transportation industry also recorded 830 billion KRW, a 29.4% increase year-on-year, but compared to October 2019, it decreased by 44%.
On the other hand, wholesale and retail industries led the overall increase in approval amounts by growing 17% year-on-year, driven by increased non-face-to-face and online purchases and sales recovery in department stores and large marts. Although consumer sentiment has improved, small-scale self-employed workers in the dining industry have not benefited from this.
It remains uncertain whether industries hit by COVID-19 can recover to pre-pandemic levels in the future. Although there were expectations that the phased return to normal life (With COVID-19) implemented last month would ease the burden on self-employed workers, the recent surge in confirmed cases is a concern. In fact, the number of new confirmed cases reached 5,123 for the first time on this day, and the number of critically ill patients reached 723, the highest ever, increasing the likelihood of strengthened social distancing measures again.
An industry official said, "Despite the impact of COVID-19, overall card approval amounts are on the rise due to increased online shopping," but added, "It is still difficult to say that consumption has recovered in industries mainly staffed by self-employed workers, such as lodging and restaurants."
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