Minimal Impact of Consumption Contraction Despite 4th Wave of COVID-19... July Card Spending Up 7%

Office of Rep. Park Kwang-on, Analysis Results of Shinhan Card Data

[Asia Economy Reporter Ki Ha-young] Despite the escalation of social distancing measures due to the fourth wave of COVID-19 last month, card approval amounts increased. This is interpreted as a learning effect resulting from the prolonged COVID-19 pandemic. However, there was a significant disparity among industries, with card approval amounts in the lodging and restaurant sectors plummeting by 17.8%.

According to Shinhan Card data analyzed by the office of Park Kwang-on of the Democratic Party of Korea on the 9th, card usage last month amounted to 14.0517 trillion KRW, a 7.0% increase compared to 13.1265 trillion KRW the previous year. Compared to July 2019, before the outbreak of COVID-19, this represents an 11.4% increase.

Offline card approval amounts showed a declining trend whenever COVID-19 spread, but last month recorded 11.6308 trillion KRW, increasing by 3.5% and 5.4% compared to last year and the year before last, respectively. Due to the rise in non-face-to-face consumption, online usage last month was recorded at 2.4209 trillion KRW, a 28.2% increase from the previous year. Compared to the year before last, it increased by 53.5%.

It is analyzed that the economic agents’ learning effect due to the prolonged COVID-19 pandemic prevented the shock intensity during the fourth wave from being as severe as before.

Even when looking at card approval amounts on a weekly basis last month, the impact of consumption contraction due to the resurgence of COVID-19 was minimal. In the first week (1st?4th, 1.4737 trillion KRW) and second week (5th?11th, 2.7305 trillion KRW), when the fourth wave began, card approval amounts decreased by 1.5% compared to the previous year. However, in the third week (12th?18th, 3.3040 trillion KRW), fourth week (19th?25th, 3.0511 trillion KRW), and fifth week (26th?August 1st, 3.7785 trillion KRW), they showed increases of 17.8%, 7.8%, and 6.3%, respectively.

However, a K-shaped polarization was evident across industries. Last month, card approval amounts in the lodging and restaurant sectors were 1.3446 trillion KRW, a sharp decline of 17.8% compared to one year ago, showing the greatest impact. Compared to 2019, it decreased by 20.5%. The transportation industry recorded 123.9 billion KRW, down 2.0% from the previous year. Compared to 2019, it decreased by 45.8%.

On the other hand, the wholesale and retail industry recorded 6.6678 trillion KRW, increasing by 11.3% and 19.1% compared to last year and the year before last, respectively. The business facility management and business support services sector (107.4 billion KRW) increased by 28.9% from last year and 13.8% from 2019. The education services sector (296.4 billion KRW) increased by 4.6% compared to one year ago but decreased by 5.5% compared to 2019.

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