In the COVID era, 'Card Spending' Increases for Online Shopping and Cars, Drops Sharply for Travel and Accommodation

Employment Decline Trend in Sectors Related to Decreased Consumer Goods "Support Needed for Struggling Industries"

On the 21st, when 1,784 new COVID-19 cases were reported, marking the highest record in a week, citizens visiting the temporary screening clinic set up near the Express Bus Terminal in Seocho-gu, Seoul, are waiting to get tested. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Yu Je-hoon] An analysis of domestic credit card spending after the COVID-19 pandemic revealed that while consumption related to e-commerce and automobiles increased, spending on travel and accommodation sharply declined, indicating a widening gap across industries and product categories.

According to the report titled "Consumption Status and Implications by Product Category Analyzed Using Personal Credit Card Data," published by the Korea Employers Federation on the 22nd, credit card spending in March reached 49.9 trillion KRW, a 12.1% increase compared to the previous year.

The report stated that the total annual credit card spending last year was 550 trillion KRW, marking a net increase of about 2.1% from the previous year. However, considering that personal credit card spending increased by 7.2% in 2019 compared to the previous year, the low growth rate of 2.1% last year is attributed to the impact of the COVID-19 pandemic, according to the Federation's analysis.

Although card spending has increased this year, it still remains under the influence of COVID-19. According to the Federation, the expected credit card spending as of March this year (assuming spending increased according to past trends) was 52.3 trillion KRW. Actual spending (49.9 trillion KRW) remained at 95.3% of the expected amount.

While credit card spending has risen this year, the pandemic has also caused a clear disparity among product categories. In fact, spending on e-commerce and automobiles increased sharply last year, with card spending rising by 124.5% and 121.0% respectively compared to the previous year. As of March this year, spending increased by 148.3% and 120.6% compared to the same month last year.

On the other hand, spending on travel, education, accommodation, and food significantly decreased. Card spending in these categories last year dropped to between 47.8% and 85.4% compared to the previous year, and as of March this year, it remained between 52.5% and 88.1% compared to the same month last year, indicating that the shock from COVID-19 has yet to be recovered.

Meanwhile, some industries with reduced credit card spending showed similar trends in employment. As card spending decreased, the number of employed persons also declined. For example, in the accommodation and food service industry, assuming card spending was 100 in December 2019, spending decreased to 65.7 and 57.2 in March and December of last year respectively, while employment also dropped to 92.1 and 85.5. However, since December last year, consumption has shown signs of recovery, and employment in related industries has partially rebounded.

Ha Sang-woo, head of the Economic Research Department at the Korea Employers Federation, stated, "Although total personal credit card spending this year is expected to recover to levels above 2019, the gap in consumption increases and decreases by product category due to COVID-19 is expected to widen more than in the past." He added, "To ensure that consumption recovery leads to economic revitalization and job creation, it is necessary to reduce uncertainty and strengthen support policies for struggling industries."

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