A recent report from the Bank of Korea highlights a worrying trend indicating that the link between increased exports, rising asset prices, and consumer spending has weakened compared to previous economic recoveries. The study, revealed on the 27th, suggests that the improvement in macroeconomic conditions, such as income and asset prices, is not translating into consumer expenditure to the same extent as it has in five previous consumer recovery phases since the 2000s.

This change is attributed to deepening imbalances between industries, especially noting that the semiconductor and IT sectors—which are currently driving economic recovery—are highly capital-intensive and reliant on imports. This results in a weak forward and backward linkage effect, which subsequently dampens the connection between export growth, household income, and an increase in consumer spending. The report points out that employment contributions from the semiconductor industry are low when compared to other industries, indicating that benefits of growth are predominantly accruing to large corporations and high-income earners.

Additionally, the report underlines that the rise in asset values, particularly in real estate, is accompanied by increasing debts, which limits the consumption effects that would otherwise be generated by greater household wealth. Moreover, the stock market's gains have proven less impactful on consumption, especially among high-income groups, whose marginal propensity to consume is below average, limiting the overall consumption response to financial gains. Overall, these factors underscore a complex economic landscape where typical pathways to increased consumer spending following good news in exports and asset prices are no longer effective.