Sales at South Korea’s top department store and discount store chains contracted in July from a year earlier, the Ministry of Knowledge Economy said on Friday, as the euro zone crisis crimps shoppers’ spending in the export-oriented economy.
July marks the first time since May 2007 in which sales at both department and discount stores fell for two consecutive months, and the data underscored weak growth momentum for the South Korean economy entering the third quarter.
Combined sales from department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae fell by 1.3 percent year-on-year, worse than a 0.9 percent drop initially seen by the finance ministry earlier this month.
Sales at the country’s top discount stores fell 8.2 percent from a year earlier, the sharpest decline since February 2011 but marginally lower than a 8.3 percent drop initially estimated by the finance ministry.
Anaemic domestic demand and slumping exports are increasing pressure on policymakers to take additional measures to support the economy. Even though the Bank of Korea delivered a surprise 25 basis-point rate cut in July, lawmakers have stepped up their demands for additional government spending to boost growth.
Finance ministry officials have resisted calls for a stimulus package, however, arguing that South Korea isn’t in a recession and stressing the need to keep government debt levels low.
The Bank of Korea currently projects 3.0 percent growth for 2012, slightly lower than the government’s projection for 3.3 percent growth. Officials from the central bank and the finance ministry have acknowledged substantial downside risks to their respective growth projections, however.