Department store sales plunge in Dec. amid economic downturn

SEOUL, Feb. 4 (Yonhap) -- Sales at South Korea's department stores plunged in December from a year earlier as high-income earners scaled back spending amid a protracted economic slump, data showed Wednesday.

According to data provided by the Ministry of Strategy and Finance and the
National Statistical Office, department store sales in December plunged 11.7
percent from a year earlier. This marked the sharpest contraction since March
2004 when they shrank 14.2 percent.
Sales at department stores have been sluggish since a 5.1 percent contraction in
September when global financial markets were hard-hit by the collapse of the U.S.
investment bank Lehman Brothers. Detailed sales figures were not made available.
The decline is attributed to reduced consumption of high-priced goods, experts
said. Sales of female apparel plunged 13.3 percent from a year earlier, further
slumping from an on-year 2.6 percent contraction in November, according to the
data.
The bleak sales data bodes ill for South Korea, which is slipping into a
recession at a faster than expected pace amid the deepening global economic
downturn.
Weakening domestic demand is a source of major concern for the South Korean
economy, as exports, its mainstay for growth, are losing momentum in the face of
a worldwide recession.
The government is striving to resuscitate sagging consumer demand by providing
extended tax cuts for purchase of high-priced goods such as automobiles, but it
remains to be seen whether such efforts will pay off as the global economic
downturn drags on.
"When the economy slows down, spending by high-income consumers usually helps
keep it going," a finance ministry official said. "We are concerned that even
those consumers might tighten their belts at a time when domestic demand is vital
(for economic recovery)."