Retail sales see largest drop in 21 years

Jan 13, 2025, 07:00 am

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Import and export cargo is piled up at Busan Port’s Sinseondae Pier/ Source: Yonhap News

AsiaToday reporter Lee Choong-jae

Last year, retail sales experienced the largest decline since the 2003 “credit card crisis. Political turmoil at home and the uncertainty abroad brought by the inauguration of the second Trump administration have simultaneously frozen domestic consumption. Concerns are emerging that our economy is entering another phase of crisis, following the financial crisis in 1997 and the global financial crisis in 2008.

According to the Korean Statistical Information Service (KOSIS) on Sunday, the retail sales index for January to November last year fell by 2.1% compared to the same period the previous year. Notably, the consumption of durable, semi-durable, and non-durable goods simultaneously declined for two consecutive years, marking the first time that has occurred since the relevant statistics began to be compiled in 1995. The consumption slump is evident across all categories including durable goods like automobiles and home appliances, semi-durable goods like clothing, and non-durable goods such as food and beverages.

From January to November last year, consumption of durable goods fell by 2.8%, semi-durable goods by 3.7%, and non-durable goods by 1.3%. Consumption of passenger cars decreased by 6.5% last year, marking a return to a downward trend after a year. Consumption of semi-durable goods, such as clothing also decreased by 3.2%. Representative non-durable goods such as food and beverages saw a 2.5% decline due to high inflation. During the same period, service production increased by only 1.5% compared to the previous year, indicating a slowdown.

The problem is that there are few signs of recovery in consumption this year.

In the January issue of “Economic Trends,” the Korea Development Institute (KDI) stated, “Recently, our economy is showing increased downside risks due to the contraction of economic sentiment amid rising uncertainty.” This marks the first time in two years that a “downside risk” warning has been issued.

Korea’s Composite Consumer Sentiment Index fell 12.3 points from a month prior to 88.4 in December, the lowest since November 2022, according to the results of the Bank of Korea’s consumer trend survey. The current Business Judgment Index is down 18 points from 70 to 52, and the future Business Outlook Index is down 18 points from 74 to 56.

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