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(LEAD) Uncertainty lingers over private spending recovery: ministry

10:58 September 17, 2021

(ATTN: UPDATES with more details in paras 10-12)

SEOUL, Sept. 17 (Yonhap) -- The South Korean economy is facing continued uncertainty about the recovery of domestic demand as the latest resurgence in COVID-19 cases is denting person-to-person service sectors, the finance ministry said Friday.

In its monthly economic assessment report, the ministry said the country's exports have extended solid growth momentum and the job market has improved despite the fourth wave of the pandemic.

"But uncertainty over domestic demand has continued, centering on face-to-face service segments," the Ministry of Economy and Finance said in the Green Book.

This photo, taken Sept. 15, 2021, shows for lease signs put up at stores in the shopping district of Myeongdong in central Seoul amid the protracted pandemic. (Yonhap)

The fourth wave of the pandemic and the toughest-ever virus curbs are feared to dampen improving private spending, potentially sapping economic recovery momentum.

For about two months, the greater Seoul area, home to half of the country's population of 52 million, has been under the toughest social distancing rules, which include business restrictions and a ban on private gatherings of three or more people after 6 p.m.

The number of daily virus cases exceeded 1,000 for the 73rd straight day, with the country adding 2,008 new COVID-19 cases Friday, raising the total to 281,938.

The finance ministry earlier said card spending did not decline amid the current wave of the pandemic in stark contrast from consumption patterns shown during previous flare-ups in virus cases.

Credit card spending grew 7.9 percent on-year last month, marking the seventh straight month of gains. Sales at department stores increased 14.4 percent.

But domestic sales of automobiles fell 7.1 percent on-year, marking the sixth consecutive month of declines, and sales at discount stores slid 2.5 percent in August.

The finance ministry said upward pressure on consumer inflation is growing, adding to economic uncertainty.

Rising oil prices and policy support measures by the government are likely to exert upward pressure on consumer prices, Kim Young-hoon, a senior ministry official, told a press briefing.

The country's consumer prices rose 2.6 percent on-year in August, marking the fifth straight month that inflation grew more than 2 percent. The central bank aims to keep annual inflation at 2 percent over the medium term.

Finance Minister Hong Nam-ki said the potential economic fallout of the current wave of the pandemic will be "inevitable" starting in August.

The government expected Asia's fourth-largest economy to grow 4.2 percent this year. The Bank of Korea forecast economic growth of 4 percent.

Citizens shop for groceries at a discount store in Seoul on Sept. 6, 2021, in the file photo, amid a spike in fruit and livestock product prices ahead of the Chuseok fall harvest holiday for Sept. 20-22. (Yonhap)

sooyeon@yna.co.kr
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