The Wholesale & Retail Trade Index Fell by the Greatest Rate In 60 Months

The Wholesale & Retail Trade Index Fell by the Greatest Rate In 60 Months. December. 29, 2003 22:48. by Kwang-Hyun Kim kkh@donga.com.

The domestic economy is hardly showing signs of recovery. The wholesale & retail trade index declined by the greatest rate in five years, although the government announced that the economy has bottomed out.

It is projected that the domestic economy will not recover for the time being. Consumer sentiment has become weaker due to outbreaks of mad cow disease and bird flu, and facility investment is showing negative growth.

The wholesale & retail trade index, a key spending index, fell 3.7 percent year-on-year, registering negative growth for 10 months, according to the November Industrial Activities of the Korea National Statistical Office (KNSO).

The decline is the greatest in 60 months since November 1998, when it was minus 8.0 percent.

In terms of retail trade, the index of department stores fell 8.8 percent, while that of discounting stores increased 9.3 percent, indicating changing spending pattern of consumers.

“Our research showed that consumers who say they planned to increase spending in six months were 20 percent higher than those who say they planned to cut spending,” said Rho Eun-jung, the head of a research center at Shinsegae department store.

The Ministry of Finance and Economy announced on December 2 that the domestic economy had bottomed out in the third quarter and was on an upswing.

Facility investments by corporations declined 8.1 percent year-on-year, due to the uncertain business environment and an investigation into illegal fundraising.

The production index increased 4.7 percent year-on-year, helped by a 34.5 percent increase in semiconductor exports.

Boosted by strong exports, the Cycle of Coincident Composite Index, a measure of business cycle indicators, rose 0.6 points from the previous month. Furthermore, a leading economic indicator, which shows the economic performance over six months, rose 1.0 percentage point. The indicator is on the increase for six months.

“We may see the domestic economy contract more in December as the spending declines due to bird flu,” said Kim Min-kyeong, a director of Economic Statistic Bureau at the KMSO.