Consumer spending in South Korea to grow 2.8% in 2022

Household spending is expected to reach KRW793.9t during the year. 

Real household spending in South Korea is expected to reach KRW93.9t, a growth of 2.8%, Fitch Solutions reported. 

In 2023, this is expected to rise by 2.6% year-on-year to KRW813.1t. This is, however, lower than the 4.1% YoY growth projected for 2021.

“The growth in 2021 reflected heightened consumer enthusiasm following a prolonged lockdown period during the Covid-19 pandemic,” the report read in part. 

“In 2023, the moderation of real household spending is largely reflecting the start of a period of stability following the period of volatility in terms of spending patterns that took place during the pandemic.”

Read more: Korea retail sales rises 9.3% in H1 2022

The report also found that retail sales and confidence have slipped since May after the consumer confidence index fell to 96.4 in June from 102.6 in May. This fell further to 86 in July. 

“The recent fall is due to consumer fears that a recession is imminent, as shown by rising inflation and increased debts,” Fitch said. 

The reduced confidence is also evident in the retail sales data as it went down 1.5%YoY in June 2022, the first time retail sales saw a negative growth since December 2020 when it decreased 2.1%YoY. 

“The high frequency data could indicate that South Korea is set to experience a period of economic instability in terms of consumer spending and confidence,” it said.