According to data released by the Bank of Korea (the central bank) in recent days, the actual income of Korean nationals has increased in 2018, and domestic demand has also expanded. South Korea’s Deputy Prime Minister and Minister of Planning and Finance, Hong Nam-ki, believes that South Korea’s domestic demand has seen a significant increase for the first time in the past seven years. This is a positive signal.
The data shows that domestic demand in Korea increased by 2.8% last year, the highest level since 2012. First, the growth of national income has driven the expansion of domestic demand. As of the third quarter of 2017, the actual income of Korean nationals has been negative for two consecutive years. In the first three quarters of last year, the actual income of Korean nationals rose by 2.4% to 3% year-on-year. The shift in national purchasing power from falling to rising directly led to the expansion of domestic demand. Secondly, the number of foreign tourists visiting Korea increased last year. The sales of Korean duty-free shops increased by 31.5% year-on-year, which also played a role in driving domestic demand in Korea. Third, sales of home appliances and automobiles have increased significantly. Previously, the domestic sales of Korean home appliances and automobiles had been in a low growth period for a period of time. Last year, new home appliances were listed, individual automobile consumption tax and fuel tax were reduced, driving home appliance sales increased by 14.1% year-on-year, and car sales increased by 7.9%.