All pain, no gain for retailers as index posts biggest drop in 21 years

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All pain, no gain for retailers as index posts biggest drop in 21 years

Audio report: written by reporters, read by AI


A banner on a closed restaurant in downtown Seoul advertising the space for rent on Sunday. [NEWS1]

A banner on a closed restaurant in downtown Seoul advertising the space for rent on Sunday. [NEWS1]

 
Koreans tightened the purse strings even more last year as the country's retail sales index posted the sharpest decline in 21 years, according to government data.
 
The country's retail sales in the first 11 months of 2024 fell 2.1 percent compared to the same period in the previous year, Statistics Korea data showed Sunday.
 

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It marks the steepest decline since 2003, when the index fell by 3.1 percent as the credit card crisis led to 4 million Koreans filing for bankruptcy.
 
The downturn was seen across durable and nondurable goods, with sales of semidurable goods like clothing, footwear and bags suffering the steepest slide of 3.7 percent.
 
It's also the first time that sales in all three sectors fell for two consecutive years since 1995, when the statistics agency began collecting related data.
 
The sales index for highly durable goods like cars and home appliances decreased by 2.8 percent during the cited period. In particular, the sales index for passenger cars fell 6.5 percent in the period, a shift from a 7.6 percent jump in 2023.
 
Sales of nondurable items like food, cosmetics and fuel dropped 1.3 percent amid an ongoing slump in domestic consumption.
 
Specifically, sales in the food and beverage sector sank by 2.5 percent last year. Spending posted an upward trend for 16 consecutive years from 2006 to 2021, but has been in decline for the past three years.
 
Service production, which has been on an upswing after the Covid-19 pandemic, rose by only 1.5 percent during the same period last year. The index rose by 6.9 percent in 2022 and 3.4 percent in 2023.
 
Domestic spending faces poor prospects of rebounding, with consumer confidence shrinking amid the prolonged political and economic uncertainties after President Yoon Suk Yeol's short-lived martial law declaration on Dec. 3 and the upcoming second term of U.S. President-elect Donald Trump.
 
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 data from the Bank of Korea. The drop was the steepest since the index fell by 18.3 points in March 2020 due to the Covid-19 outbreak. It's also steeper than the decline during the 2016 impeachment of former President Park Geun-hye, when the index fell by 9.4 points between October and December.
 
The Ministry of Economy and Finance also projected Korea’s economy to grow 1.8 percent this year, a moderation from the previous year’s 2.3 percent, citing a sluggish recovery in domestic demand, slowing export growth and mounting uncertainties.

BY SARAH CHEA [[email protected]]
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