Household Spending Overseas Hits Record High
By Na Jeong-ju
Staff Reporter
Households are spending a record amount of money in foreign countries while tightening their belts at home, delaying the much hoped for recovery in domestic consumption.
Families spent 4.75 trillion won ($5.16 billion) in the three months to September overseas, beating the previous record of 4.63 trillion won in the first quarter of the year, the Bank of Korea said in a report Tuesday.
``People spent more abroad during the summer vacation and their spending is unlikely to drop given increasing overseas travels,'' a BOK official said.
Their spending in the third quarter was 4.97 percent of their total spending in the period, up from 4.68 percent in the second quarter. The percentage as a total consumption expenditure is also an all-time high.
Households' overseas spending once fell to as low as 4.04 percent of their total consumption expenditure in the fourth quarter of 2006 but has steadily risen since then, the bank said.
The bank said that the won's strength against the dollar also prompted Koreans to travel and study overseas more than before.
``The cost for travel, studies and medical treatment accounted for most households' overseas spending,'' the BOK official said.
Rises in overseas spending go in line with surging credit card uses in foreign countries.
Korean residents' credit card spending overseas also hit an all-time high of 1.6 trillion won ($1.7 billion) in the third quarter, up 33 percent from a year earlier. Per capita spending reached $864, up 24 percent from a year earlier.
In contrast, non-residents in Korea spent a record low amount of 842 billion won in the third quarter, down 7.7 percent from a year earlier. Incoming foreign travelers cut their spending due to the won's strength against the dollar.