South Korea household spending to rise by 3.4% in 2022

Consumer spending will exceed pre-pandemic levels, according to Fitch Solutions.

Total household spending in South Korea is expected to grow by 3.4% in 2022 to reach around $663.5b (KRW794.3t), with consumer spending expected to grow beyond pre-pandemic levels, according to a report by Fitch Solutions. 

Fitch said that the projected growth is lower than the 3.7% real growth in 2021 but spending is “returning to its medium-term trajectory,” following two years of COVID-19-related base effects.

“With real household spending reaching KRW794.3t ($663.5b) over 2022, we believe consumer spending will recover to just above the pre-COVID-19 level of KRW770.4t ($643.6b) recorded in 2019,” it said.

It also said that the forecast consumer spending for the country is aligned with the Country Risk team’s forecast for economic growth which will grow by 2.8% in 2022, following a 4% growth in the previous year.

Fitch also added that with the economic growth, the average unemployment rate to 3.4% in this year, down from the estimated 3.6% in 2021.

“Better employment prospects will support South Korean consumers' ability to spend. Higher vaccination rates and gradual easing of domestic restrictions will support domestic activity over the coming quarters providing tailwinds for growth,” it said.

“That said, our Country Risk team see headwinds from slowing growth in China and a broader cooling of global trade, given South Korea’s high dependence on external demand,” Fitch added.

South Korea had 85.3% of its population fully vaccinated, whilst 552% had received their booster shots as of 8 February, according to Fitch Solutions.

$1 = KRW1,197.08