SEOUL (Reuters)

South Korea’s retail sales declined in December, reflecting weak consumer spending and the fallout from impeached President Yoon Suk Yeol’s martial law declaration during what is typically one of the busiest shopping periods, according to government data released on Monday.

December retail sales fell by 0.6% following a flat November, marking four consecutive months of no growth.

A report by Statistics Korea revealed that sales of cars and home appliances dropped by 4.1% from the previous month, while entertainment spending also decreased by 0.6%, dampened by the political turmoil affecting year-end festivities.

“There has been a downturn in sentiment due to the martial law declaration, and momentum in export growth is deteriorating,” said Park Sang-hyun, an economist at iM Securities.

In the fourth quarter, South Korea’s economy experienced minimal growth of just 0.1%, following President Yoon’s unexpected martial law declaration on December 3, which sent the won to its lowest level in 15 years and resulted in the unprecedented arrest of a sitting president in the country.

In contrast, factory output in December exceeded market expectations, showing the largest increase in a year and a half, largely driven by growth in chip and car production.

Industrial output rose by 4.6% month-on-month on a seasonally adjusted basis, significantly surpassing the 0.4% increase predicted in a Reuters poll of economists and marking the steepest rise since August 2023.