Koreans cut spending amid gloom cast by ferry sinking
SOUTH Korean consumers have reined in their spending since the ferry sinking that is believed to have claimed 300 lives, as a sombre mood grips the nation, a report said yesterday.
Entertainment spectacles have been cancelled and product launches have been put back as Koreans watch coverage of the April 16 disaster and its aftermath.
Daily credit card use dropped 4.4 per cent - 8.7 billion won (S$10.6 million) - on month in the week after the Sewol sank with 476 people on board, the Korea Herald reported, citing company data from a major credit card firm.
The firm, which was not named, had recorded rising card use in the week leading up to the tragedy. Korea University's Oh Jung Keun said any prolonged fall-off could have a measurable impact on the economy as a whole.
"GDP growth could stay below the projection (3.9 per cent) of the Bank of Korea because the consumption growth has slowed again after the ferry Sewol accident," Mr Oh said.
Figures released last week by the central bank showed South Korea's economy grew by 0.9 per cent in the three months to March for the second consecutive quarter, with exports remaining solid but domestic spending stalled.
Across the country, travel agencies, transport companies and hotel chains are bracing themselves for lost bookings during the country's so-called golden week at the start of next month, as schools cancel trips and towns postpone spring festivals.
The government had on Feb 3 designated May 1-11 as a special period for tourism, encouraging schools to take short breaks and providing discount coupons for hotels, attractions and restaurants as part of its plan to boost domestic tourism spending to 30 trillion won by 2017, from 24 trillion won in 2012.
South Korea's golden week comprises a Labour Day holiday on May 1, Children's Day on May 5 and Buddha's Birthday on May 6.
"May is usually a big consumption month, with people giving presents to children, parents and teachers," said chief economist Park Sang Hyun of HI Investment & Securities in Seoul. It is too early to tell if spending will fall enough to affect second-quarter GDP data, he said.
Retailers say shoppers are staying at home rather than seeking spring promotions. Sales at Lotte Department Store, the nation's biggest with a 45 per cent share, fell 1.3 per cent between April 16 and April 20, compared with the same period last year.
Cinema-goers were also fewer after the ferry incident, the Korean Film Council said. Tickets sold at Samsung Everland, an amusement park operated by the country's largest conglomerate, fell by 15 per cent to about 38,000 on April 19, compared with the previous Saturday, according to the company.
The question for retailers, hotels and tour companies is how long the sombre mood will last.