Semiconductor Boom Drives Consumer Recovery as Q2 Card Approvals Rise 7.6%

Global demand for semiconductors has led to an increase in gross domestic income (GDI) in South Korea, resulting in a 7.6% rise in card approval amounts in the second quarter of this year compared to the same period last year.

According to the Credit Finance Association on July 30, the total card approval amount for the second quarter reached 336.9 trillion won, with the number of approvals at 7.96 billion, marking increases of 7.6% and 6.0%, respectively, from the previous year.

Both personal and corporate card approvals showed growth. The approval amount for personal cards was 273.7 trillion won, up 7.4% year-on-year, while the number of approvals rose 6.3% to 7.55 billion. Corporate card approvals totaled 63.4 trillion won, an 8.7% increase, with the number of approvals rising 1.4% to 410 million.

The Credit Finance Association attributed the improved consumer conditions primarily to the global semiconductor demand. In fact, real gross domestic product (GDP) increased by 3.7% compared to the previous year, while real GDI surged by 15.6%.

However, rising prices and fuel costs due to instability in the Middle East also impacted the increase in card approval amounts. The consumer price inflation rate rose from 2.6% in April to 3.1% in May and 3.2% in June, marking two consecutive months of increases. The average prices of gasoline and diesel in the second quarter rose by 21.9% and 32.4%, respectively, compared to the same period last year.

By sector, health and social welfare services saw the highest growth rate at 7.0%, followed by accommodation and food services at 6.8%, and wholesale and retail trade at 5.9%. In contrast, the transport sector experienced an 8.3% decline year-on-year due to decreased demand for airline tickets and travel products amid the Middle East conflict and rising fuel surcharges.

A representative from the Credit Finance Association stated, "The improvement in consumer conditions is attributed to strong corporate performance and government policies aimed at stabilizing prices and livelihoods, which have somewhat alleviated the domestic consumer burden stemming from the instability in the Middle East." They added, "Overall card approval performance continues to show a relatively high growth rate compared to the past."