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Flunctuations in the consumption of foreigners in Korea and the implications

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Flunctuations in the consumption of foreigners in Korea and the implications04



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Title Flunctuations in the consumption of foreigners in Korea and the implications
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Material Type Videos
Author(English)

Korea Development Institute

Publisher

[Sejong] : Korea Development Institute

Date 2018-11
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Holding Korea Development Institute
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Abstract

The gap between private consumption and domestic consumption is growing. So, what is the difference between the two? Private consumption is the total spending of the residents of a country both at home and abroad. And domestic consumption is the total spending of both residents and foreigners within the same domestic territory. In Korea, domestic consumption by foreigners is more closely associated with production by consumption-related industries than the overseas private consumption by residents. Despite the relatively rapid recovery in private consumption, production by consumption-related industries recovered less in 2017, implying a relatively weaker correlation between the two. This is mostly due to the decline in total domestic consumption as foreigners tightened their purse strings. So, how significant is the domestic consumption by foreigners in Korea? KDI analyzed the impact of domestic consumption by foreigners on consumption-related industries. It was found that although the share of domestic consumption by foreigners in total domestic consumption is small, its contribution to the volatility of domestic consumption has grown over the years. On a one point increase in the standard deviation of domestic consumption by foreigners, the value-added in the services and food and accomodations industries and the growth rate in services consumption would all increase.