South Korea’s Retail Sales Decline Amid Political Unrest and Weak Consumer Spending

South Korea’s retail sales fell 0.6% in December, marking the fourth consecutive month without growth as weak consumer spending and political turmoil dampened demand, government data showed Monday. The downturn followed President Yoon Suk Yeol’s shocking martial law declaration on Dec. 3, which led to his impeachment and arrest, further unsettling the economy.

Statistics Korea reported a 4.1% drop in sales of cars and home appliances, while entertainment spending declined 0.6%, reflecting subdued year-end celebrations. The economic uncertainty weighed on consumer sentiment during what is typically a peak shopping season.

“The martial law declaration has weakened sentiment, and export growth is losing momentum,” said Park Sang-hyun, an economist at iM Securities.

South Korea’s economy barely expanded in Q4, growing just 0.1%. The political crisis also sent the South Korean won plunging to a 15-year low, amplifying market instability.

Despite sluggish retail performance, industrial output surged 4.6% in December, far exceeding the 0.4% increase predicted by economists. The gain, driven by strong semiconductor and automobile production, marked the sharpest monthly rise since August 2023, offering a rare bright spot in the economy.

The data underscores the widening gap between industrial recovery and consumer spending, with political instability further complicating South Korea’s economic outlook.