South Korean consumption coupons linked to 20% new spending, study finds

South Korea's consumption coupons, distributed last year to stimulate the economy, generated new spending equivalent to 20% of their value, according to a Bank of Korea study. This means households spent an average of 20,000 won on new purchases for every 100,000 won in coupons received.

The central bank analyzed credit card transaction data and conducted surveys to assess the economic impact of the 13.5 trillion won in coupons issued nationwide. The findings suggest that the coupons successfully encouraged additional consumption, with an estimated 2.8 trillion won in increased sales for businesses across the country.

“

The policy path where household disposable income increased by consumption coupons leads to actual consumption and increased sales at usage locations, thereby increasing economic growth rate, has worked effectively.

The study highlighted that the coupons had a more significant effect on lower-income households, whose marginal propensity to consume was higher than that of wealthier households. Additionally, regions outside the Seoul metropolitan area saw a greater boost in sales, indicating that geographically targeted distribution can be an effective strategy.

Consumption was particularly stimulated in categories such as durable goods, semi-durable goods, and leisure activities. Essential items like food, education, and medical expenses showed a smaller increase in new spending driven by the coupons. The Bank of Korea estimates that the coupons could contribute approximately 0.12% to South Korea's GDP in 2025, underscoring the policy's effectiveness in boosting economic growth and supporting vulnerable populations.

“

The differentiated support by income level and region introduced in the consumption coupon distribution appears to have had the effect of stimulating consumption for vulnerable classes and increasing sales in areas outside the Seoul metropolitan area.