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Overseas spending soars during Korea's 'golden week,' putting effectiveness of substitute holidays in doubt

Published: 19 May. 2025, 17:25 Updated: 21 May. 2025, 14:20

Travelers move around the duty-free shopping area in Incheon International Airport's Terminal 1 on May 2. [NEWS1]

Overseas spending far outpaced domestic consumption during Korea’s six-day “golden week” holiday earlier this month, raising questions about the effectiveness of government-designated substitute holidays aimed at boosting local demand.

Local spending slumps

Individuals’ domestic credit card spending between May 1 and 6 rose 3.1 percent compared to the same period last year, according to data released Monday by the Shinhan Card Big Data Research Institute.

However, the number of transactions in key spending categories — such as restaurants, cafés, convenience stores, department stores, supermarkets, gas stations and amusement parks — declined by 2.1 percent, while the number of card users dropped by 2.3 percent.

This is despite the calendar allowing for a six-day holiday with just one day of leave on May 2. Fewer people used their cards domestically, suggesting that the extended break did not translate into increased local consumption.

Sector-specific spending figures showed decreases across the board: supermarkets fell 2.6 percent, convenience stores 1.8 percent, gas stations 1.5 percent and department stores by 0.3 percent. Amusement parks were the exception, posting a 31.9 percent increase in spending. Analysts attributed this to improved weather this year, as rain dampened last year’s Children’s Day.

Cars fill up the Seoul Grand Park's parking lot in Gwacheon, Gyeonggi, on May 4, the second day of the long May holidays in Korea. [YONHAP]

In contrast, overseas credit and debit card spending during the holiday jumped 17.5 percent year-on-year. The number of transactions climbed 20.1 percent and users increased 13.7 percent. Overseas spending grew 5.6 times faster than domestic spending.

“Despite high inflation and a weak won, demand for overseas travel was clearly strong during the holiday,” a Shinhan Card spokesperson said.

Spending dips on bonus holidays

The findings reinforce growing skepticism over the efficacy of temporary holidays for stimulating domestic consumption. A similar pattern played out earlier this year during the Lunar New Year holiday from Jan. 27 to Jan. 30, which stretched to six days with the addition of a substitute holiday.

A total of 2.97 million Koreans traveled abroad in January, up 7.3 percent from the previous year and exceeding the pre-pandemic high recorded in January 2019, according to data from the Korea Tourism Knowledge and Information System.

Meanwhile, retail sales and service output — an indicator that includes spending at eateries and cafés — fell 0.6 percent and 0.9 percent, respectively, compared to the previous month. This drop in service output is closely tied to the business outlook of small merchants and the self-employed.

Menus are displayed in front of restaurants in Myeong-dong, Jung District, central Seoul, on May 6. [NEWS1]

The trend also appeared in October last year, when substitute holidays were added for Armed Forces Day, National Foundation Day and Hangeul Day. Retail sales dropped 0.7 percent from the previous month.

Credit card spending between Jan. 24 and 31 this year fell 33.9 percent from the week before, according to Statistics Korea’s Nowcast data portal. During a similar holiday stretch from Sept. 27 to Oct. 4 last year, card usage dropped 20.8 percent. The figures suggest that small businesses suffer when extended holidays send consumers abroad.

“Because of [traditional] media and social media, people are used to seeing overseas trips as part of everyday life and now think of overseas travel as something easy and routine,” said Heo Kyung-ok, a professor of consumer science at Sungshin Women’s University. “That’s made people more inclined to go abroad when they have a long holiday.”

“With more people taking paid leave and working fewer hours overall, adding holidays doesn’t help domestic spending anymore,” Heo added.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JEONG JIN-HO [[email protected]]