South Korea’s lodging and dining industry’s revenue plummeted to a 10-year low in the first quarter with a surge in loan requests, the central bank said Wednesday.
According to data from the Bank of Korea, the industrial production index for the hospitality sector stood at 85.6, down 15.5 percent from the same quarter last year, marking the steepest fall since 2010. The IPA -- which measures current economic conditions -- is calculated based on sales figures in each business sector.
Meanwhile, loan requests by lodging and restaurant businesses also jumped 14.1 percent to some 64 trillion won ($54 billion), reaching the highest since 2008 when the central bank began compiling related data.
Among the lenders, nonbank financial institutions, including the National Credit Union Federation of Korea as well as SBI Savings Bank, issued nearly 21 trillion won, a record-high of 22.8 percent on-year. Meanwhile, loans from bank lenders also climbed by 10.1 percent, the first increase by two-digit figures in four years, the BOK added.
The financial instability triggered by a drop in operating profit across the industry is likely to continue, experts said.
“The continuing spread of coronavirus infections and stricter social distancing rules will further deteriorate the cash-strapped merchants in the domestic lodging and dining sector,” said Cho Young-moo, a researcher at LG Economic Research Institute.
“However, even after the coronavirus spread slows down, debt fears will persist with the interest rates set to climb,” he said.
By Choi Jae-hee (firstname.lastname@example.org