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Saturday, 23 March, 2002, 11:59 GMT
S Korea shops its way to recovery
South Korean President Kim Dae-jung, centre, inspects a Kia Motors car assembly line in Kwangmyong
South Korean companies have been hard hit
test hello test
By the BBC's Caroline Gluck in Seoul
line
While much of Asia is in recession, South Korea's economy continues to grow.


Saving is a good thing, but if people spend, money will circulate and that will help the economy. In the long run, it will create more jobs

South Korean shopper
Asia's third-largest economy posted 3.7% GDP growth in the final quarter of last year.

While exports have continued to fall, domestic consumption has increased, helping to fuel South Korea's economic recovery.

It seems South Koreans just want to keep on shopping.

Serious shopping

It's a weekday afternoon, but the department store I'm in is full of shoppers. These aren't just people who have come to window shop or compare prices.

Most are spending large amounts of money.

"I've bought some shoes, a pair of sneakers, a jacket, trousers, and a suit. I've spent about $500," says 23-year-old Sei Yun-Park, out shopping with her mother.

"Saving is a good thing, but if people spend, money will circulate and that will help the economy. In the long run, it will create more jobs," she says.

"People are spending a lot more and the economy seems to be growing," says another woman, who has spent about $200 on clothing.

'I'm quite hopeful that the economy will do well in the future," she says.

Bubble trouble?

But not everyone is as optimistic.

Daewoo factory
South Korea's exports are slumping

In the household section, Ho Young-Kim is with his mother. She has just spent $700 on a special fridge to store kimchi, Korea's staple spicy vegetable dish.

He is more worried, however.

"There is a kind of bubble economy, I think. Our income is a little bit low, but our spend outcome is more high. We spend more money than our income. It will be a problem in the future, I think."

But as far as the shop staff are concerned, business has never been better.

"Compared to last year, we're seeing 50% more customers. People aren't too worried about the cost of the clothes. They tend to buy what they want," says Im Young-Nam, a section manager in the women's fashions department.

Subway decorated with World Cup information
The economy should get a further boost from the World Cup

And her view is backed up by statistics just released by the Bank of Korea, showing 3.7% GDP growth in the final quarter of last year.

The figures indicate that strong domestic consumption was the engine driving the economy.

Easy money

"Traditionally, Korean people had been known for their frugality, but nowadays, investment opportunities are saturated; while availability of credit cards, consumer credit, is quite liberal now, also very low interest rate," explains Koo Sung-Yeal, an economics professor at Yonsei University.

"It seems that Korean people are enjoying their consumption opportunities. This is somewhat different from Japanese people.

"For Japanese people, they save... in spite of almost negative interest rate, but Korean people, if there's not much merit in saving, then they purchase," he adds.

It looks as though consumer spending has been the saviour of the South Korean economy as exports continue to fall.

While there are longer-term worries about the economy over-heating, and large unpaid credit debts; for the moment, South Koreans are still happy to shop.

See also:

22 Nov 01 | Business
Korean economy beats forecasts
20 Nov 01 | Business
Seoul cuts luxury taxes
01 Aug 01 | Business
Korean exports slump
19 Mar 01 | Business
Growth to slow in Asia
16 Mar 01 | Business
Dark clouds over Asia
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