The recent ferry sinking that claimed the lives of at least 188 people is damaging the consumer sentiment, as many Koreans remain shocked by the tragedy.
A variety of data showed that a huge of number of people have canceled social and personal gatherings and trips after April 16, when the ferry capsized.
According to a major credit card company, its customers’ average daily credit card use dropped by 4.4 percent, or 8.7 billion won ($8.2 million), from April 16-22, compared to the same period a month earlier.
The issuer noted that their card use had been increasing by 0.6 percent a day between April 9-15, compared to the same period in March.
Another firm’s data also showed that consumers’ credit use had been climbing in early April, but fell after the catastrophe.
Some analysts forecast that the lackluster consumption ― if it continues for weeks or months ― could hold back economic growth, while policymakers have been striving to spur the economy.
“GDP growth could stay below the projection (3.9 percent) of the Bank of Korea because the consumption growth has slowed again after the ferry Sewol accident,” said professor Oh Jung-keun of Korea University.
An official of Statistics Korea said the state-run agency is closely monitoring economic indices amid uncertainty after the disaster.
Some economists, however, predicted that the slowdown in consumption would be temporary.
They cited past cases such as the collapse of Seongsu Bridge in 1994, the collapse of Sampoong Department Store in 1995 and the arson at Daegu Metro in 2003.
Those disasters were not linked to an annual fall in consumer sentiment, though they negatively affected it for a short time.
However, the Sept. 11 terrorist attacks in 2001 and the earthquake-led tsunami had negative impacts on the yearly figures for the overall economy in the U.S. and Japan, respectively.
Recently, Samsung Group decided not to hold its TED-like event later this month, which the firm holds on a regular basis.
LG Group postponed a gala show featuring gymnast Son Yeon-jae until the latter half of this year, and its affiliate LG Household & Healthcare last week canceled a fan meeting for Kim Soo-hyun, an actor from the hit TV show “My Love from the Star.”
Korea’s three major mobile carriers ― SK Telecom, KT and LG Uplus ― also joined the mourning by scaling down the size of their planned events.
Smartphone manufacturer Pantech has postponed the release of its new flagship device.
By Kim Yon-se (email@example.com