[News in Numbers] Year-End Spending in 'Emergency' Due to Martial Law... 9 out of 10 Small Businesses Report "Sales Decline"

"I hope the year-end of the people will be a little happier. I also urge you to resume the canceled year-end parties."

This was said by Woo Won-sik, Speaker of the National Assembly, on the 14th when he declared the passage of the impeachment motion against President Yoon Seok-yeol. Speaker Woo said, "The self-employed and small business alley economy are in great difficulty."

The reason Speaker Woo appealed to 'resume year-end parties' immediately after announcing the passage of the impeachment motion is that the already frozen consumer sentiment has been further depressed through the recent 12·3 martial law and impeachment political turmoil.

Yonhap News

According to the report of the Small Business Federation (Sogongyeon) titled 'Emergency Survey on Small Business Economic Outlook after the 12·3 Martial Law Incident,' 88.4% responded that sales decreased after the martial law incident. The highest proportion of businesses experienced a sales decrease of more than 50% at 36%, followed by 30-50% decrease at 25.5%, 10-30% decrease at 21.7%, and less than 10% decrease at 5.2%. The number of customers visiting stores also noticeably declined. 89.2% answered that the number of customers visiting their business decreased after the martial law incident.

A survey conducted by the Korea Federation of SMEs also revealed that nearly half of small business owners suffered damage due to the declaration of martial law. According to the emergency status survey of small business owners and self-employed released on the 16th, 46.9% of small business owners and self-employed who experienced direct or indirect damage such as group reservation cancellations due to domestic political uncertainty. Types of damage included 'cancellation of year-end group dinners such as year-end parties' (food service industry) and 'cancellation of travelers' accommodation and inquiries about safety' (lodging industry).

Nearly half (46.6%) of small business owners and self-employed who have not yet suffered damage responded that they might be affected in the future. Also, when asked how long the current domestic economic uncertainty would continue, 40.4% answered '1 to 2 years,' and 30.1% expected 'within 6 months.' The response that it would be prolonged for more than 2 years was 17.8%, which was higher than the 6.1% who answered 'only until this year.'

Eight years ago in 2016, during the impeachment of former President Park Geun-hye, the consumer sentiment index reflecting the domestic economy dropped sharply from 101.9 in October to 95.8 in November, and continued to decline to 94.3 in December when the impeachment motion was passed in the National Assembly, and 93.3 in January 2017. It recorded 94.5 in February, and only after the Constitutional Court decided to dismiss former President Park in March did it rebound to 97.0. It took five months to exceed the baseline value (100) and reach 101.8 in April.

As it seemed that the year-end special demand would not materialize and consumption stagnation would continue for the time being, small business owners and self-employed appealed to stimulate consumption. In a statement, Sogongyeon said, "Due to reservation cancellations and consumption contraction caused by a series of incidents, the already difficult situation of small business owners has been pushed to the extreme, far from the year-end special demand," and "Now that the situation has turned, we earnestly ask the public to visit small business stores that brightly light up the streets with peace of mind."