"Clear Consumer Recovery Trend"... Card Spending Increases for 3 Consecutive Months

Korea Credit Finance Association, 'April 2021 Card Approval Performance'
April Card Approval Amount Up 18.3% YoY

[Asia Economy Reporter Ki Ha-young] The amount of card (credit and debit) approvals has increased for three consecutive months, showing a clear recovery in consumption. It is analyzed that consumer sentiment, which was suppressed due to COVID-19, is reviving.

According to the 'April 2021 Card Approval Performance' released by the Korea Financial Telecommunications & Clearings Institute on the 2nd, the card approval amount in April reached 81.3 trillion KRW, an 18.3% increase compared to the previous year. During the same period, the number of approvals also rose by 13.2% from last year, recording 1.93 billion transactions.

The card approval amount has been on the rise for three consecutive months since February. After a 1.9% decline in January, it increased by 8.9% in February, 20.5% in March, and 18.3% in April, marking nearly 20% growth for two consecutive months. This is interpreted as a combined effect of pent-up consumption being released and a base effect from the consumption sentiment contraction caused by COVID-19 last year.

Compared to the pre-COVID-19 year of 2019, the card approval amount also showed a clear recovery trend with increases of 3.7% in January, 15.8% in February, 15.4% in March, and 11.7% in April.

However, the results varied by industry. In April, the card approval amount for the transportation sector was 630 billion KRW, a 42.4% increase from last year, but a 56.6% decrease compared to 2019. This decline is attributed to reduced use of airlines, railways, and other transportation due to strengthened social distancing measures recommending reduced travel and movement. Due to poor sales in travel-related services, the business facility management and business support services sector recorded 230 billion KRW, a 19% increase from last year, but still 44% lower than in 2019. During the same period, the accommodation and food service industry increased by 3%, but decreased by 10.9% compared to 2019.

An industry insider said, "Considering inflation rates, the card approval amount has shown an annual growth rate of 5-6%. While this can be seen as a clear recovery in consumption, consumption in sectors such as travel and accommodation, excluding specific industries like department stores where revenge spending occurred, has yet to recover."

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