South Korea’s private spending in the third quarter grew at a far slower pace than that of Group of Seven (G7) countries due to the impact of high interest rates and inflation, data showed Monday.

According to the data by the Organization for Economic Cooperation and Development (OECD), South Korea’s private consumption rose 0.2 percent in the three-month period through September from a year ago.

It is the lowest quarterly growth since the fourth quarter of 2020, when the corresponding figure slumped 6.4 percent amid the COVID-19 pandemic.

The easing of COVID-19 restrictions pushed up South Korea’s consumption growth to 4.6 percent in the first quarter of 2023, but the figure has been on the decline due to monetary tightening and high-flying consumer prices, dropping to 1.5 percent in the second quarter.

While the slowdown in consumption is common across the globe, South Korea’s downside pace is faster than that of major developed countries.

G7 countries — the United States, Britain, Germany, France, J
apan, Italy and Canada — saw their average private spending increase 1.2 percent on-year in the July-September period, while the average figure for the 38 OECD member nations posted 1.5 percent in the same period.

Experts noted that South Korea’s inflation rate, which has been slowing recently but at a very slow pace, still remains a constraint on consumption.

Asia’s fourth-largest economy recorded 3.6 percent growth in consumer prices for 2023, slower than 5.1 percent a year before, continuing to experience high inflationary pressure throughout the year.

The central Bank of Korea (BOK) said in November that it will maintain its tightening policy until inflation approaches its target level of 2 percent.

The BOK kept its key interest rate unchanged at 3.5 percent for the seventh straight time. The central bank delivered seven consecutive rate hikes from April 2022 to January 2023.
Source: Yonhap News Agency