Government "Concerns Over Domestic Demand Impact Due to COVID Spread... Uncertainty Continues"

Ministry of Economy and Finance Publishes 'Recent Economic Trends (Green Book December Issue)'
Fading 'With Corona' Effect

"Concerns Over Domestic Demand Impact in Face-to-Face Service Sectors Due to Rising COVID-19 Cases and Strengthened Quarantine Measures"

Indicators Improve with 13.6% Increase in November Card Approvals

Concerns Over Inflation and Supply Chain Disruptions
Continued 'External Uncertainty' Amid Omicron Variant Spread and Major Countries' Monetary Policy Shifts

Kim Young-hoon, Director of Economic Analysis at the Ministry of Economy and Finance, recently presenting the economic trends. (Photo by Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has assessed that the increase in COVID-19 cases and the strengthening of quarantine measures are likely to impact domestic demand, including face-to-face service industries. This comes at a time when indicators were improving, such as last month's double-digit growth in domestic card approval amounts. Externally, uncertainties persist due to concerns over inflation, global supply chain disruptions, the spread of the COVID-19 Omicron variant, and shifts in major countries' monetary policies.

In the 'Recent Economic Trends (Green Book December issue)' published by the Ministry of Economy and Finance on the 17th, it was stated, "Recently, our economy has maintained solid export and employment momentum, but there are concerns that the increase in COVID-19 cases and strengthened quarantine measures may affect domestic demand, including face-to-face service industries." The Green Book had mentioned domestic demand uncertainties since July, but the phrase disappeared last month with the transition to a phased recovery of daily life (With Corona) system, indicating a change in the situation.

Looking at the private consumption sector, domestic card approval amounts rose by 13.6% last month, marking double-digit growth for two consecutive months and continuing an upward trend for ten months. However, discount store sales failed to maintain the 2.9% growth seen in October and recorded -7.2% last month. The consumer sentiment index rose by 0.8 points from October to 107.6 last month. Employment increased by 553,000 compared to the same month last year. The unemployment rate also fell by 0.8 percentage points to 2.6% during the same period. Consumer prices rose by 3.7% compared to a year ago.

The financial market experienced stock price declines, won-dollar exchange rate increases (won depreciation), and government bond yield declines due to concerns over the spread of the variant virus and the U.S. Federal Reserve's tapering (asset purchase reduction) initiation.

Regarding external conditions, the Ministry of Economy and Finance diagnosed that "uncertainties persist." However, last month, international oil prices fell due to decisions to release strategic reserves by the U.S. and others, as well as concerns over the spread of the variant virus. The price of Dubai crude oil per barrel dropped from $81.6 in October to $80.3 in November. The Ministry explained, "Externally, the global economic recovery trend continues, but uncertainties persist amid ongoing concerns about inflation and supply chain disruptions, the spread of variant viruses, and the possibility of accelerated monetary policy shifts in major countries."

The Ministry emphasized, "While focusing on thorough quarantine responses, supporting small business owners and others affected, and underpinning economic recovery, we will also make every effort to manage risks such as proactive management of living costs and responses to the supply and demand of major raw materials."

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