SEOUL, Dec. 19 (Korea Bizwire) – South Korea’s consumer spending sank to a “seriously” low level in the third quarter of the year, government data showed Monday, as most households tightened their purse strings amid slowing economic growth.
Slumping household consumption is widely feared to come as a further drag on Asia’s fourth-largest economy struggling to regain growth momentum amid sputtering exports and stubbornly flaccid domestic demand.
According to the data by Statistics Korea, slightly over 13 percent of all households with two members or more spent a monthly average of less than 1 million won (US$840) during the July-September period, up from 12.6 percent from three months earlier.
It was the highest ratio since the previous record of 14 percent posted in the fourth quarter of 2009 in the wake of the global financial crisis.
Overall, households with a monthly expenditure of less than 2 million won rose slightly in the third quarter from three months earlier, while those spending between 2 million won and less than 4 million won declined.
In comparison, about 9 percent of the nation’s households spent a monthly average of 4 million won or more during the three-month period.
Mirroring the drop in consumption, households especially cut down on their spending on foods and other daily necessities, according to the data.
Household spending on foods and nonalcoholic beverages shrank 3.2 percent in the third quarter from a year earlier, marking the fourth consecutive quarter of decline. It was the longest losing streak since the agency began to compile related data in 2003.
Experts attributed slumping household consumption to escalating uncertainty over the economy’s future, including the ongoing corporate restructuring, rising unemployment and soaring household debt.
South Korea’s shipping and shipbuilding industries are in the midst of restructuring, which has sparked concerns over more job cuts. South Korea’s household debt hit a record high of 1,257.3 trillion won as of end-June.
Private economists have painted a gloomier picture of consumer spending down the road, citing a U.S. interest rate hike and the National Assembly’s impeachment of President Park Geun-hye over a massive corruption scandal.
“The situation could take a turn for the worse as the country is faced with political instability and worries about U.S. rate hikes at the same time,” said Kim Kwang-suk, who teaches at Hanyang University in Seoul.