Seoul’s poor domestic demand won’t cure itself

Slowing pace: A pedestrian passes by a shop in the Dongseongro district in Daegu, South Korea. Fears of serial failures of small businesses in various sectors cast dark clouds over domestic demand in the country. — Bloomberg

WHILE South Korea’s economy appears to sustain growth thanks to robust exports of a few big-ticket items, a slew of statistics released in recent weeks point to a deepening slump in domestic consumption. Against this backdrop, policy authorities seem to lack both the will and the tools to change course.

Statistics Korea’s retail sales index fell 2.9% in volume terms during the second quarter of this year compared to the same period in 2023, marking the worst drop in 15 years since the first quarter of 2009, when the world was reeling from the ripple effects of the US subprime mortgage crisis.