This undated file photo shows commuters at a Seoul subway station. (Image courtesy of Yonhap)
SEOUL, Dec. 3 (Korea Bizwire) – South Korea’s economic backbone—households headed by those in their 40s—saw a sharp drop in business income during the third quarter, reflecting prolonged domestic demand stagnation and heightened challenges for self-employed workers.
According to Statistics Korea on Friday, the average business income for 40-something households fell to ₩1.07 million, down 13.1% from the same period last year. This marks the steepest decline since records began in 2006 and brings income levels back to those seen during the pandemic in 2021.
The downturn is tied to the significant proportion of 40-somethings working in retail and wholesale industries, sectors heavily reliant on domestic consumption. Of the 1.15 million self-employed individuals in this age group, over 20% are engaged in buying and selling goods.
However, retail sales have been declining for 10 consecutive quarters, the longest streak since record-keeping began in 1995.
This income decline, combined with financial strain, underscores the precarious situation faced by this demographic. Data from the Bank of Korea reveals that households led by those in their 40s have the highest debt-to-income ratio (LTI) at 253.7%, with outstanding loans exceeding 2.5 times their annual income.
Looking ahead, there is cautious optimism that domestic demand may improve in 2025, supported by the Bank of Korea’s recent interest rate cuts. However, broader economic uncertainty—exacerbated by global factors such as U.S. political shifts—could dampen recovery efforts.
The central bank has already lowered its GDP growth forecast for 2025 to 1.9%, citing ongoing consumer spending constraints, rising loan repayments, and employment uncertainties at some large corporations.
As the economic struggles of the 40-something demographic persist, their challenges could weigh heavily on the nation’s broader economic vitality.
Ashley Song (ashley@koreabizwire.com)
