Consumer spending growth slows down

South Korea’s consumer spending grew at a slower pace than the country’s economic growth for the past three years, data showed Monday, adding to concerns that domestic demand may further cool.

The annual growth of Korea’s consumer spending ran lower than that of the economic growth between the third quarter of 2009 and the second quarter of this year, marking the longest streak of such a trend, according to data by the central bank and the Samsung Economic Research Institute.

The average growth rate of consumer spending reached 2.96 percent during the cited period, lower than an average of 4.4 percent for the quarterly economic growth, according to the data.

The data adds to concerns that the growth momentum of the Korean economy has been weakening amid sputtering domestic demand.

Given that exports, which account for 50 percent of the economy, are cooling due to the global slowdown, weak domestic demand is feared to further dent Asia’s fourth-largest economy.

The Bank of Korea (BOK)’s full-year growth estimate was put at 3 percent, but many analysts said that the local economy is likely to grow in the 2 percent range this year.

Meanwhile, the growth of household debt has surpassed the expansion of the Korean economic growth, fueling concerns that household’s high indebtedness is feared to further crimp already-sluggish domestic demand, the data showed.

The on-year expansion of household debt hovered above that of the quarterly economic growth for the sixth straight quarters in the second quarter.

Household credit grew 5.6 percent to 922 trillion won ($822.3 billion) in the second quarter from a year earlier, higher than the 3.5 percent on-year growth of the Korean economy, according to the data by the Bank of Korea.

Such a trend has been maintained since the first quarter of 2011 when household debt grew 8.7 percent and the on-year economic growth rate reached 7 percent.

The average growth of household credit came in at 7.88 percent between the first quarter of 2011 and the second quarter of this year, higher than an average of 4.97 percent of the economic growth, the data showed. (Yonhap News)