Self-Employed Suffering During Year-End and New Year Amid Martial Law Aftermath
Following the emergency martial law situation and the impeachment phase of President Yoon Suk-yeol, South Korea is experiencing a markedly different atmosphere this Christmas season compared to previous years. Political turmoil and economic uncertainty have combined to freeze consumer sentiment, and small business owners are facing economic hardships. In this context, self-employed individuals who had hoped for a year-end boom are encountering unexpected crises.
Lee Chang-yong, Governor of the Bank of Korea, recently mentioned the possibility of lowering this year's economic growth forecast from the previous 2.2% to 2.1%. In particular, concerns were raised that the fourth-quarter growth rate, initially expected to be 0.5%, could fall below 0.4%. He pointed out that consumer sentiment has sharply contracted, leading to a decrease in credit card spending. If this consumption contraction continues, next year's economic growth rate may also be revised downward.
The Asian Development Bank (ADB) also recently lowered its outlook for the Korean economy. It adjusted next year's economic growth forecast down by 0.3 percentage points to 2%, reflecting external risks. However, since South Korea's martial law situation was not factored into this figure, the actual economic conditions could be even bleaker. Investment bank Goldman Sachs warned of the negative impact of political turmoil on the economy in a report titled "Aftermath of the Short Martial Law Incident." It particularly projected next year's Korean economic growth rate at 1.8%, lower than the market average, analyzing that risks are skewed downward.
The economic situation felt by small business owners is even more severe. According to a survey conducted by the Federation of Small Businesses, 88% of respondents reported a decline in sales after the emergency martial law. Among them, 36% said their sales dropped by more than 50%, illustrating the severity of economic difficulties. Additionally, credit card sales at dining establishments decreased by about 10% compared to the same period last year, indicating a significant contraction in domestic demand. Due to the sales decline, small business owners who had expected a lively year-end boom are instead facing concerns about their livelihoods.
The government and private companies are pursuing various measures to overcome this. Choi Sang-mok, Minister of Strategy and Finance, urged the public not to cancel scheduled year-end gatherings and events but to proceed with them to support small business owners. Local governments are also encouraging the continuation of various festivals and events as planned, and the financial sector is fostering an atmosphere that encourages departmental year-end parties. These measures appear to be efforts to revive consumer sentiment and stimulate the domestic economy, even if only slightly.
However, consumer sentiment among the public facing Christmas amid political turmoil remains frozen. On the other hand, unexpectedly, flower shops and floriculture farms are enjoying a boom due to a surge in wreath demand. Supporters and opponents surrounding the impeachment and martial law issues have expressed their opinions through wreaths, spreading a culture of wreath protests. Around the Yongsan Presidential Office and major political hubs, wreaths bearing pro- and anti-messages are densely displayed, vividly reflecting the current situation. Some of these wreaths contain encouraging messages, while others are condolence wreaths expressing support for impeachment. This ironic reality, where floriculture farms are making unexpected sales depending on the political situation, reflects the paradoxical circumstances.
December is a crucial period accounting for a significant portion of annual earnings for small business owners. However, this year, political uncertainty combined with external economic risks is having a fatal impact on them. Looking at past impeachment cases, during the 2006 impeachment of President Roh Moo-hyun, the Chinese economy was strong, and during the 2017 impeachment of President Park Geun-hye, the semiconductor boom offset economic repercussions. But this year, the situation is more difficult due to the slowdown in the Chinese economy and uncertainties in U.S. trade policies. Experts warn that these difficulties are likely to continue into next year.
Despite this crisis, some experts advise turning the crisis into an opportunity. In particular, there is analysis that now may be a good time to invest in the domestic stock market. However, the economic hardships felt by individual citizens remain heavy. South Korea, facing Christmas and the year-end, confronts the crisis in a calmer atmosphere than ever before. The fact that more wreaths are sold than Christmas trees not only highlights the difficulties of small business owners but also starkly illustrates the current political and economic situation. Whether the year-end will become a turning point for economic recovery or the beginning of another uncertainty depends on future policy responses and the choices of the people.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
