Travel deficit widens as more Koreans travel overseas

[Photo by Yonhap]

South Korea’s tourism industry continues to struggle due to rip-off prices and a lack of systematic policies. This comes despite calls to boost domestic travel consumption, which is one of the pillars for domestic demand.

According to an analysis by Maeil Business Newspaper of the Bank of Korea’s balance of payments data on Monday, the country’s travel account deficit for the first quarter of 2024 totaled $3.89 billion, the largest in 22 quarters since the third quarter of 2018.

The deficit period also lengthened significantly. The travel account had been in deficit for an unprecedented 60 consecutive quarters from the second quarter of 2009 to the first quarter of 2024, hitting record lengths each quarter.

The deficit is becoming chronic, lasting twice as long as the previous 30 consecutive quarters of deficit (Q2 2001to Q3 2008). The travel deficit is likely to worsen in the second quarter of 2024 and beyond as people continue to prefer overseas destinations over domestic ones.

The Korean economy contracted by 0.2 percent in the second quarter as the slump in domestic demand deepened. Critics say that the government is doing little to revitalize domestic tourism, which has a significant impact on improving domestic demand.

For its part, Incheon International Airport Corp. estimates that 3.85 million people will depart from Incheon Airport during the 2024 peak summer season (July 25th to August 11th). The average number of travelers per day (213,782 people) is expected to increase by 19.4 percent compared to the same period a year ago and the figure is higher than that of the 2019 peak season (211,076 people), before the Covid-19 pandemic hit.

“Encouraging people who want to travel abroad to stay domestic is an outdated policy approach,” Shim Won-sup, a professor of tourism at Mokpo National University, said. “We need to rebuild a tourism control tower on top of establishing a systematic strategy to revitalize domestic demand and mitigating regional decline.”