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NO : 212 Date : Aug/30/04 11:08
Name : gohomestay/ E-mail : <info@gohomestay.com>
Subject : Spending for overseas trips, study surges
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Riding a diehard boom in travel and study abroad, Koreans' overseas spending on these activities swelled 16 percent during the first seven months this year despite the prolonged depression for domestic consumption.
Current-account data from the Bank of Korea showed that $6.5 billion flowed out from the country via travelers and students between January and July, up 16 percent from the year-earlier period.

The seven-month figure has approached full-year figures from the previous six years, which averaged $7.3 billion. This suggests Koreans' outbound enthusiasm has hardly withered despite economic hardships at home and local service providers should improve their competitiveness in order to keep consumers at home, analysts said.

"We have a long way to go before repairing the time-honored travel-account deficit, as people are still rushing to visit golf courses and casinos abroad, proving domestic service providers lack competitiveness," said Kim Sung-sik, an economist at LG Economic Research Institute.

Overseas payments by Koreans abroad have increased in recent years, resulting in brighter red-ink figures for the nation's travel balance.

Such payments stood at $3.5 billion in 1998 but ballooned to $4.9 billion, $7.1 billion, $7.6 billion and $10.5 billion over the following four years before dipping to $10 billion in 2003.

As recently as 1999, Korea enjoyed a travel-account surplus, but it swung to a deficit of $297.6 million the next year and then saw the shortfall widen condsiderably to $1.2 billion, $4.5 billion and $4.7 billion over the next three years.

This year's seven-month payments abroad total 7.6 trillion won when calculated by the average exchange rate during the period of 1,166 won per dollar. It breaks down to an average 1.1 trillion won each month and should amount to a record 13 trillion won ($11.2 billion) if the trend continues throughout the year.

The central bank estimates that monthly payments may increase in August as overseas travel usually peaks during the summer vacation season and money transfers to students abroad surge ahead of the beginning of a new school semester in September.

The Korea Customs Service reported recently that the number of Koreans visiting other countries during the seven months to July jumped 39.2 percent year-on-year to hit 4.7 million. The number accounts for 71.8 percent of last year's full-year figure.

"The fast-widening outflow is a structural problem, which will hardly recede unless the nation's excessive focus on the manufacturing industry spreads to the service sector," Kim commented.

By Kim Ji-ho

*REF : http://www.koreaherald.co.kr/SITE/data/html_dir/2004/08/30/200408300031.asp
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