South Korea's credit card spending grew in the third quarter at the sharpest pace in almost two years, data showed Wednesday, pointing to a recovery in domestic demand from the deep trough that followed April's deadly ferry disaster.
Purchases made with credit cards reached 147.17 trillion won (US$141 billion) in the July-September period, growing 6.3 percent from a year earlier, according to the data compiled by the Credit Finance Association. The third quarter gain marks the highest since the 10 percent on-year rise in the fourth quarter of 2012.
The data includes transactions on credit, debit and prepaid cards. Cash advances, overseas spending and card loans were not included.
Many South Koreans use multiple credit cards, which has contributed to boosting private spending in the past few years, and their spending with plastic is often regarded as an indicator in measuring private consumption.
The South Korean economy expanded 0.9 percent in the third quarter from three months earlier, accelerating from the 0.5 percent on-quarter rise the previous quarter, as private consumption showed signs of recovery from a pullback following the mid-April ferry disaster, data from the central bank showed.
Private spending, which took a blow from the ferry tragedy, increased 1.1 percent on-quarter, turning around from a 0.3 percent decline in the second quarter, according to the Bank of Korea.
The government has undertaken a series of stimulus measures, including eased rules on mortgage loans, to shore up crippled domestic demand.
Early this month, South Korea's central bank pitched in by lowering its policy rate to a record low of 2 percent to give a much-needed boost to Asia's fourth-largest economy that is struggling with slow demand and weak sentiment despite ongoing stimulus measures.
In August, the central bank cut the rate by a quarter percentage point as well.
The data also showed that the use of debit cards has been on a steady rise, accounting for a record high of 20 percent of the total card purchases in the third quarter.
Debit cards are expected to make up a larger portion of purchases made with plastic this year on the back of a government effort to invigorate debit spending through tax incentives, the association said.
Last year, credit card spending rose 4.7 percent on-year to reach 545 trillion won, the slowest pace since 2005 when the association began to compile related data, a sharp turn from the previous year's 13.5 percent expansion. (Yonhap)
