Labor Institute Report "Disaster Relief Funds Increase Consumer Spending by 10.4%"

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[Asia Economy Reporter Eunbyeol Kim] A survey estimated that the large-scale disaster relief funds provided by the government and local governments in response to the novel coronavirus disease (COVID-19) crisis increased consumer spending by about 10%.

According to a report published in the December issue of the Korea Labor Institute's monthly "Labor Review" on the 20th, consumer spending is estimated to have increased by 10.4% due to the effects of the government emergency disaster relief funds and local government disaster relief funds distributed from May 13.

Hong Minki, a senior research fellow at the Korea Labor Institute who authored the report, divided the COVID-19 crisis period into five phases: before the spread of COVID-19 (Phase 1: January 1 to February 18), start of spread (Phase 2: February 19 to April 17), decrease in confirmed cases (Phase 3: April 18 to May 13), disaster relief fund distribution (Phase 4: May 14 to July 8), and after July 9 (Phase 5). He estimated the effect of the disaster relief funds based on card spending amounts for each period. The card spending data was based on the card company with the largest domestic market share.

The effect of the disaster relief funds was derived by comparing card spending amounts between Phases 3 and 4, while adjusting for seasonal changes by reflecting the increase or decrease in card spending during the same period last year.

As a result of this analysis method, the increase in consumer spending due to the distribution of disaster relief funds was estimated at 10.4%. The total amount of government emergency disaster relief funds and local government disaster relief funds reached 17.6 trillion won. Research fellow Hong analyzed, "About 30% of the disaster relief funds were used to substitute consumer spending that would have occurred even without the fund distribution, and the remaining approximately 70% generated new consumption."

Meanwhile, Research fellow Hong estimated that consumer spending decreased by 16.3% due to the COVID-19 crisis by comparing Phases 1 and 2. Additionally, by comparing Phases 2 and 3, he viewed that consumer spending increased by 7.3% as an effect of the relaxation of social distancing in April.

The sectors where consumer spending decreased the most due to the COVID-19 crisis were travel (-160.4%), followed by early childhood education (-69.3%), private academies (-59.2%), lodging (-58.4%), and entertainment (-43.8%). The sectors with the highest increase in consumer spending due to the disaster relief funds were fashion and accessories (22.5%), clothing and apparel (21.5%), travel (20.5%), pharmacies (20.2%), and educational supplies (20.1%), in that order.

This content was produced with the assistance of AI translation services.