Retail sales post steepest fall in 21 years amid prolonged economic downturn

Retail Sales Post Steepest Fall In 21 Years Amid Prolonged Economic Downturn

A shop remains closed in Myeong-dong, Seoul's iconic shopping and tourist district, Dec. 29. Yonhap

A store stays closed in Myeong-dong, Seoul’s iconic purchasing and vacationer district, Dec. 29. Yonhap

By Lee Kyung-min
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Retail gross sales fell 2.2 p.c in 2024 amid the extended financial downturn within the postpandemic years of speedy financial tightening and excessive borrowing prices, which hit client sentiment exhausting, Statistics Korea mentioned on Monday.

This was the sharpest drop in 21 years for the reason that 2003 bank card disaster when retail gross sales sank 3.2 p.c. The determine peaked at 5.8 p.c in 2021 however has since been on a downtrend for the previous three years — the longest interval of decline for the reason that company started compiling information in 1995.

Additional tightening the already stagnant client sentiment is the tragic Dec. 29 Jeju Air aircraft crash and President Yoon Suk Yeol’s impeachment.

Statistics Korea mentioned gross sales of client items took a dive throughout the board final 12 months.

Semidurables, similar to garments, dropped 3.7 p.c from 2023. Sturdy items together with vehicles dropped 3.1 p.c. Nondurables similar to meals fell 1.4 p.c.

In December alone, retail gross sales slid 0.6 p.c, regardless of gross sales of nondurable items inching up 1 p.c. Gross sales of durables plunged 4.1 p.c, whereas semidurable items ticked down 0.6 p.c.

The December figures have been on a four-month downtrend — the longest interval of weak spot in home consumption since September.

In the meantime, total industrial manufacturing grew 1.7 p.c in 2024 from a 12 months earlier, underpinned by a restoration in semiconductor exports. In 2023, the year-on-year improve was 1 p.c.

The 1.7 p.c development was pushed by a 4.1 p.c improve in manufacturing manufacturing.

Electrical gear and uncooked metals manufacturing declined, in contrast to semiconductors and prescribed drugs.

Exports grew 4 p.c, however home demand dropped 2 p.c.

Manufacturing decreased 2.6 p.c in 2023 amid softening demand within the semiconductor market, nevertheless it rebounded to submit a 4.4 p.c improve final 12 months.

Providers inched up 1.4 p.c final 12 months, the smallest improve since 2020 when it dropped 2 p.c.

By sector, transportation, stockpiling, finance and insurance coverage expanded, in contrast to retail providers.

Services funding was up 4.1 p.c, aided by a 2.9 p.c improve in semiconductor equipment and a 7.8 p.c improve in transportation gear.

Accomplished building dropped 4.9 p.c, the steepest lower since 2021 when it dropped 6.7 p.c. This illustrates the prolonged downturn within the building trade.

In December alone, total industrial manufacturing elevated 2.3 p.c from the earlier month.

This ended a three-month decline since September, led by a 4.6 p.c development in manufacturing, together with semiconductors and vehicles that surged 5.6 p.c and 10.7 p.c, respectively.

“Industrial manufacturing stays strong, in contrast to home spending,” a statistics company official mentioned. “The pattern is prone to proceed, pushing again the financial restoration in the interim. Retail gross sales and the development sector are displaying probably the most laggard development.”

It stays to be seen whether or not the uptick in January’s client sentiment as measured by the Financial institution of Korea (BOK) will assist increase the stagnant establishment.

The BOK’s client sentiment index got here to 91.2 factors, up 3 factors from the earlier month, aided by expectations that the martial law-triggered political wrangling would discover a breakthrough.

This was a serious enchancment from December when it plummeted to 88.2, down 12.5 factors from the earlier month.

The December determine was the steepest decline since March 2020 when it slumped 18.3 factors on the top of the COVID-19 pandemic.

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