Retail sales, which have seen the longest continuous decline in history, are showing signs of recovery recently. After the drop in retail sales in the second quarter decreased to a stable level, the impact of consumer coupons has increased the possibility of a rebound in the second half of the year.
According to the Korean Statistical Information Service (KOSIS), the retail sales index (constant index) for the second quarter of this year was 101.8 (2020=100.0), a 0.2% decrease compared to the same period last year. This decline is the smallest since the domestic downturn began in the second quarter of 2022 (-0.2%).
Retail sales have decreased for 13 consecutive quarters, setting an all-time record for the longest decline. The drop peaked at 3.1% in the second quarter of last year, and following shocks from the December 3rd emergency martial law and the Jeju Air incident, it decreased by 2.0% in the fourth quarter of last year.
However, the decline in the first quarter of this year was reduced to 0.3%, and in the second quarter, it decreased further, showing signs of reversal. In particular, expectations for a rebound in the second half of the year are growing, as the impact of the consumer coupons issued last month has not yet been reflected in the second quarter indicators.
The production in the service sector, which is another pillar of consumption, also increased by 1.4% in the second quarter, showing a positive trend. This marks the largest increase in a year since the second quarter of last year (1.6%). Typically, service consumption and goods consumption show diverging trends, but this time they are both showing improvement, which is interpreted as a positive signal.
Consumer sentiment is also showing a clear recovery trend. The Bank of Korea's Consumer Sentiment Index (CCSI) dropped to 88.2 during the emergency martial law in December last year, but has since risen steadily to 93.4 in March, 93.8 in April, 101.8 in May, 108.7 in June, and reached 110.8 in July. The July figure is the highest in nearly four years since June 2021 (111.1).