MENA Newswire News Desk: Sales of Korean domestic market-oriented companies experienced their first on-year decline in four years during the first half of 2024, reflecting weaker consumer spending, according to market data reported by Yonhap News Agency. The Federation of Korean Industries (FKI) released a report analyzing the financial performance of 814 non-financial corporations required to submit financial disclosures. The findings indicated that while overall corporate sales rose by 6.7 percent during the January-June period compared to the same period last year, the domestic segment faced significant challenges.
Of the companies analyzed, sales by 194 export-oriented firms grew robustly, up 13.6 percent year-on-year. However, the performance of 620 local market-oriented businesses contrasted sharply, with sales shrinking by 1.9 percent. This decline marked the first contraction since 2020, when domestic-oriented firms recorded a 4.2 percent drop. The report further noted that the export figures were bolstered significantly by the performance of Samsung Electronics, a dominant player in Korea’s economy. Excluding Samsung’s contribution, the overall sales growth of export-oriented firms would fall to a 5.9 percent decrease, reflecting broader global market pressures.
Corporate investment also declined during the first half of 2024, dropping 8.3 percent on-year. This marked another worrying milestone, as it was the first contraction since 2020. The drop in investment raises concerns over the potential weakening of South Korea’s long-term economic growth, as reduced capital expenditures may hamper the development of critical industries. The sluggish performance of domestic-oriented firms highlights the challenges posed by softer consumer spending in the local market.
Economists warn that a continued downturn in domestic demand could weigh heavily on South Korea’s economic recovery amid uncertain global conditions. The FKI’s findings underscore the importance of measures to stimulate domestic consumption and ensure sustained corporate investment to bolster economic resilience. The data provides a critical lens through which policymakers and market participants can gauge the challenges facing one of Asia’s key economic powerhouses.