Korea’s domestic consumption has steadily weakened since the 1990s, with recent data suggesting the trend has entered a prolonged downturn rather than a temporary economic slump, according to the Korea Chamber of Commerce and Industry (KCCI) on Wednesday.     The new study, released Wednesday, titled Trends and International Comparison of Domestic Consumption, found that annual growth in consumer spending declined consistently from 1996 to 2024.  Consumption growth, a key indicator of domestic demand, showed marked drops during each major economic crisis.    Korea's consumption growth rate stood at 9.1 percent until the 1997 Asian financial crisis, but fell sharply to 4.5 percent in its aftermath.    The 2003 credit card crisis saw it drop to 3.1 percent, and the 2008 global financial crisis reduced it further to 2.4 percent. The Covid-19 pandemic in 2020 pushed it down again to just 1.2 percent.    The share of domestic consumption in GDP has also declined.    Although it rebounded slightly to 49.9 percent in 2023 after hitting a low of 47.1 percent in 2021, Korea ranks 11th among 12 major OECD countries with economies larger than $1 trillion.    When expanded to all 38 OECD members, Korea ranks 28th. KCCI noted that the few countries with lower domestic consumption ratios, such as Israel and the Czech Republic, are smaller markets with populations under 10 million.    The findings indicate that the downturn in domestic consumption is not solely the result of short-term factors. Instead, it reflects long-term structural issues such as demographic aging, concentration of household assets in real estate and a weakening of job creation in key industries.    The report highlighted a significant shift in consumer behavior among older Koreans.    In the fourth quarter of 2006, people aged 60 and above had the highest average propensity to consume at 81.3 percent, compared to the overall average of 76.6 percent.   By the fourth quarter of 2023, that figure had fallen to 64.6 percent, the lowest among all age groups and below the overall average of 69 percent.   During that same period, the proportion of people aged 65 and older grew from 7 percent to 20 percent.    KCCI proposed long-term strategies, including attracting foreign residents and improving the spending capacity of older consumers, to address the structural slowdown.    “A short-term stimulus to boost consumer sentiment is not enough to reverse the trend,” said Kim Hyun-soo, head of KCCI’s Economic Policy Team. “What is needed is proactive investment in the future, alongside structural reform of the domestic economy.”   (ICE SEOUL)

Fonte notizia: KOREA JOONGANG DAILY