By Kang Seung-woo
The European sovereign debt crisis is hurting Korea’s domestic demand, as department stores’ sales suffered a first decline in nearly three years last month and car sales are also on a downward path, the finance ministry said Sunday.
According to the latest figures from the Ministry of Strategy and Finance, sales at the nation’s three major department stores ― Lotte, Hyundai and Shinsegae ― dropped 1.1 percent from a year earlier.
The November reading marked the first year-on-year decline since the 0.3 percent contraction in February 2009, when Asia’s fourth-largest economy was hit hard in the wake of the global financial crisis, sparked by Lehman Brothers’ bankruptcy in late 2008.
The department stores’ sales posted a double-digit increase for four consecutive months since October last year, peaking with a 24 percent expansion in January this year.
Those of large discount stores posted a 0.3 percent year-on-year growth during the same period.
The domestic automobile sales by industry leader Hyundai Motor and four other carmakers have slid for the second straight month.
In November, sales fell 12.7 percent year-on-year following an 8.8 percent decrease the previous month.
Due to sinking consumer confidence and financial authorities’ regulations on credit card firms’ loan expansion, spending via plastic increased 14.5 percent from a year ago last month, with the lowest annual increase since the 10.8 percent growth in February.
In the first 20 days of November, imports of consumer goods increased 8.7 percent year-on-year, the lowest gain since December 2009, according to the figures.
The finance ministry attributes the declining domestic demand to internal and external uncertainties including the ongoing debt problem in the eurozone.
“While retail sales remain sluggish, the decrease of domestic automobile sales appears to be gaining momentum,” said a ministry official.
Some market watchers say that soaring household debt is also crippling home consumption.
According to the Bank of Korea, the nation’s household debt reached 892.5 trillion won ($790.75 billion) as of the end of September.
Earlier this month, the central bank announced that private spending rose 2 percent in the third quarter, but it marked the lowest advancement since the 0.4 percent climb tallied in the July-to-September period of 2009.