Amid the pandemic, South Korea's consumption of durable goods increased

South Korea's consumption of durable goods increased significantly despite the economic downturn caused by the spread of the epidemic last year, according to a survey results, indicating that households' consumption behavior is different from past economic crises.

Especially during the epidemic , wealthy families have significantly increased their purchases of cars, furniture, and home appliances.

The above analysis was made by Jang Chang-woo, a researcher at the Korea Development Institute (KDI), and Cho Deok-sheng, an associate director, in the report " Pandemic Economic Crisis and Household Consumption" released on the 11th .

According to the report, due to concerns about the spread of the epidemic and social alienation caused by household consumption last year, sales centered on in-person consumption (semi-durable goods such as clothing, services, and pure overseas consumption) dropped significantly.

On the other hand, unlike past economic crises, household consumption behavior may have changed, with a significant increase in non-face-to-face consumption centered on durable goods.

In fact, the share of face-to-face consumption in nominal household expenditures decreased from 68.5% in 2011-2019 to 65.5% last year, while the share of asymmetric face-to-face consumption increased from 31.5% to 34.5% during the same period.

The report explains that in a normal economic crisis, households reduce unnecessary spending on durable goods to cope with economic uncertainty, but last year, due to a decrease in consumption and a change in consumption structure, household consumption of durable goods increased significantly.

By consumption category, consumption of all categories of semi-durable goods and face-to-face services fell by 12.2%. On the contrary, durable consumer goods such as automobiles, household appliances and furniture increased by 16.4%.

The report explains that mandatory social activities to prevent the spread of infectious diseases have restricted the consumption of semi-durable goods and face-to-face services .

The report suggests that household consumption is likely to remain subdued until the epidemic disappears , making it necessary to continue to implement mitigating macroeconomic policies.

At the same time, due to the huge impact on consumption caused by the spread of the epidemic among the middle-income class, it is necessary to consider the income level of each economic entity and the scale of the income shock and select the recipients of government support .

South Korea

Durable goods

epidemic