"Government Regional Revitalization Policies to Drive Domestic Consumer Stocks This Year"

"Policies to Promote Employment and Revitalize Local Economies to Drive Consumption Growth"
"Unemployment Rate in Manufacturing-Based Regions Drops to 1%"

Securities analysts predict that this year's government policies to promote employment and revitalize regional economies will serve as a driving force for domestic consumer stocks.

On January 12, Jeong Hyeonggi, a researcher at DS Investment & Securities, stated in a report, "There are many regions where the growth rate could be revised upward through policies that supply labor and increase consumption in local areas."

"US Consumption Unlikely to Keep Pace with Economic Growth"

Prime Minister Kim Minseok and other economic figures are holding the "2026 Economic Community New Year's Meeting" on the afternoon of the 2nd at the International Conference Hall of the Korean Chamber of Commerce and Industry in Jung-gu, Seoul.

Jeong began by comparing the US and Korean economies, noting, "Both countries benefited significantly from artificial intelligence (AI) last year." In the United States, aging facilities were replaced and data centers were built based on AI investments, and productivity was greatly improved by substituting labor with AI. In Korea, semiconductors led exports, and increased consumption also contributed to driving economic growth.

However, he predicted that US consumption, having already peaked, will slow down this year. While improvements in labor productivity drove last year’s economic growth, he explained that this very factor could negatively affect consumption in the current year.

Jeong noted, "The US economy in the fourth quarter of last year turned out to be better than expected," adding, "The recent rebound in the share prices of US consumer goods companies such as Costco is also a result of the release of related economic indicators." Nevertheless, he emphasized, "US consumption likely peaked in the fourth quarter of last year. Although precautionary interest rate cuts amid economic uncertainty supported consumption, household income will not be able to keep up with consumer spending."

"Labor Supply and Consumption-Boosting Policies... Momentum for Domestic Consumer Stocks"

In contrast, Jeong expects consumption in Korea, where last year’s economic growth rate remained at 1%, to rebound this year. Only four regions-Seoul, Ulsan, Gyeonggi, and North Chungcheong-exceeded the national average growth rate through the third quarter of last year. As a result, he analyzed that the government will likely seek to boost regional economies through fiscal policy this year. While last year’s increase in private consumption was driven by consumer coupons, he expects that this year, policies to promote employment and revitalize regional economies will more likely be used to stimulate consumption.

Jeong explained, "If we look at employment data by industry, there has already been a significant increase in employment in sectors where the government has a strong influence, such as electricity and gas supply, water supply, sewage, and waste management. This is the result of the government increasing job supply to prepare for economic shocks caused by political events at the end of 2024," adding, "The government will continue to support the Korean economy this year, but there is a possibility that private consumption will continue to follow, thereby boosting the growth rate."

He continued, "Although there is a generally pessimistic outlook on regional economies, some areas with a manufacturing base, such as North Gyeongsang Province, have already seen the unemployment rate drop to 1% as of November last year. There are many regions where growth rates could be revised upward through policies that supply labor and increase consumption in local areas, and this will provide momentum for domestic consumer stocks."