South Korea’s Consumer Spending Reached Record Lows

Consumer spending in South Korea declined to its record low in 2017 alongside the dull employment outlook and increasing population aging. The average private expenditure of to the gross domestic product (GDP) of the country reached 48.1 percent last year, which is lower than 0.6 percentage points a year ago, showing a record to be the lowest since 1970 at the Bank of Korea.

The number remained unchanged at 70 percent earlier in 1970, as the consumer expenditure fell to 53.8 percent in the year 2000. Consumption started to have a downturn after a rebound to 55.5 percent in 2002, it drops to less than 50 percent for the first time since 1988 in the past three years prior diving to renewed lows in 2015.

The private spending-to-GDP ratio of South Korea is lower compared with other developed countries such as Germany, Japan, United Kingdom and the United States, showing figures higher than 53 percent since 2015. Based on the report published in the previous year, the National Assembly Budget Office also said that the private spending-to-GDP suddenly weakened.

According to experts, the decrease in consumer spending previously was due to the urge of the country to improved economic growth with a target of high trade volume and investment. However, the private spending showed an opposing result because of its recent decline which is associated with the aging population in South Korea and slackening labor market.

Moreover, Korean consumers felt uncertain towards the future since income resources are unstable. Economists believed that the booming population of senior citizens without pension focuses on saving which influence the overall private spending of the country.