Koreans becoming more frugal abroad

The Korea Times

The Korea Times

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Tue, September 26, 2023 | 22:23

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Koreans becoming more frugal abroad

Posted : 2019-05-24 19:20

Updated : 2019-05-24 19:20

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By Jhoo Dong-chan

A 33-year-old Seoulite surnamed Park travels to Western countries for his summer vacation every year, but decided to visit Thailand this time.

Reflecting increasing living expenses in Seoul, Park tightened his vacation budget by choosing the Southeast Asian country instead of his regular destinations.

"Despite the government's announcement the inflation rate has remained at a similar level to last year, prices seem to be spiking to me," he said.

"What really remains just the same is my salary. The inflation rate outpaces my salary growth every year. Now I need to tighten my vacation budget. It seems Thailand is an ideal destination for my budget this year."

According to the Bank of Korea (BOK), Koreans spent a total $4.68 billion via credit cards abroad in the first quarter of the year, down 3.3 percent from the previous quarter and also down 7.8 percent from a year ago.

This is the first time for the figure to decline since 2009.

"A total of 7.86 million people left the country in the first quarter. This is the highest figure ever, but they spent less in the period by choosing countries with lower prices for their vacation destinations," a BOK official said.

This was attributed to the decline in their disposable income in the first quarter of the year.

Statistics Korea said in a recent study that household disposable income averaged 3.74 million won ($3,143) in the first three months this year, down 0.5 percent from the same period the year before. It is also the first time for the figure to decline since the third quarter of 2009.

The study also displayed the lower 20 percent income bracket's disposable income was 1.25 million won, also down 2.5 percent from the same period last year. Their disposable income has declined since the government raised the minimum wage by 16.4 percent in January last year.

President Moon Jae-in claimed the government's income-driven growth policy will help raise the disposable income of the lower income bracket while narrowing the income gap.

The study, however, demonstrated the policy has yet to produce any tangible results. Rather, businesses tightened their labor forces to cut operating costs.

"The government's income-driven growth policy did not raise their income, but rather made them poorer," said a market observer who asked not to be named.

"Disposable income does not usually decline unless the economy is struck by a crisis. The government now needs to change its direction since the policy failed to produce a tangible outcome over the past year."

jhoo@koreatimes.co.kr