Travel deficit hits 3-year high, more Koreans go overseas

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Travel deficit hits 3-year high, more Koreans go overseas

Outbound tourists flock the departure hall of Incheon International Airport on April 30. [NEWS1]

Outbound tourists flock the departure hall of Incheon International Airport on April 30. [NEWS1]

 
Travel deficit in the first quarter logged a three-year high as more Koreans went overseas to spend their money, while fewer foreigners visited Korea and spent less.
 
Park Ji-ye, a 32-year-old office worker, traveled to Tokyo last month for an early summer holiday. Encouraged by the yen's low exchange rate, she chose Japan over Jeju island and spent around 600,000 won ($454) in total on a three-day trip to Tokyo.
 
“Accommodation and other travel fees in Korea became too expensive after Covid, so I thought it was better to go to Japan for that same amount of money,” said Park.  
 
The travel deficit for the first quarter this year came in at $3.24 billion, the highest since the third quarter in 2019 at $3.28 billion, according to the Bank of Korea Tuesday. It was also the highest first-quarter data since 2018.
 
Korean travelers spent $5.68 billion overseas between January and March, recovering 75.8 percent of $7.4 billion, the pre-pandemic level at the end of 2019.
 
On the other hand, during the same period, foreign tourists only spent $3.02 billion in Korea in the first quarter, or 56.8 percent of pre-Covid spending levels.
 
The difference in the number of outbound and inbound tourists accounted for this shortfall.
 
Around 4.98 million Koreans went on overseas trips in the first quarter, spiking 1,114 percent on year, but comparably, the number of tourists coming to Korea grew by just 1.71 million, or 510 percent.
 
The slow return of Chinese tourists to Korea also contributed to the discrepancy. The number of Chinese tourists in March this year was just 15 percent of the number of tourists recorded in March 2019, according to the database firm CEIC Data.
 
Travel deficits played a role in aggravating trade deficit woes. The trade balance in the first quarter inked $4.46 billion in red on weak exports, which was the first first-quarter drop since 2012.
 
The government’s hope for a recovery in domestic demand has been dimmed as more Koreans choose to go overseas. The monthly revenue of department stores in April dipped by 0.8 percent on year, according to the Finance Ministry’s latest report on the economic trend.
 
April’s domestic credit card transactions, which serve as an indicator of domestic demand, rose by 5.6 percent on year, slowing down from a 9 percent jump in March.
 
“If the recovery in domestic demand fails to meet expectations, a rebound in the second half may be unlikely,” said Sung Tae-yoon, an economics professor at Yonsei University.
 
Experts call on the government to halt the consumption drain by issuing travel coupons for domestic trips in the short term and sharpening the service industry’s competitive edge in the mid to long term.
 
Service prices, which soared following eased Covid-19 regulations, need to be downsized, they say. The inflation on personal services between January and April lingered around 6 percent, according to the statistics agency. Accommodation prices inflated by as much as 13.5 percent on year during the same period, the cost of eating out by 7.7 percent and recreational facility fees by 8.3 percent.
 
“Rather than focusing solely on the balance of goods, the government should seek to boost the Korean service industry in the long run,” advised Kang Sung-jin, an economics professor at Korea University.
 

BY KIM NAM-JUN [[email protected]]
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