The Korean economy is going through a rapid change during the COVID-19 pandemic. It seems that some people are adapting to the situation while others are left in shambles. Let's see who the luckiest player is with ST. .............................. Ed
Articles such as “Korean Air, employees' leave are without pay”, “ 50s self-wnership commits suicide” have been prevalent during the onset of COVID-19. Korea is a country with a high degree of dependence on foreign trade, which was greatly affected because of the COVID-19's damage on the global economy. The damage of economy impact is checked via Realindex. The GDP(Gross Domestic Product) gross dropped to the lowest level in the first quarter after the 2008 global economy risk, recording a -1.4% gross. Through the depreciation of the first quarter gross, we can verify various industries at stake.
'Economic Shock' has different effects in tourism, private businesses, and online markets. First, the two areas of tourism with the largest impact are the airlines and travel agencies. In March 2020, Eastar Jet suffered from financial difficulties and Jeju Air has taken the responsibility. Eastar Jet restructures 750 employees through layoff and voluntary retirement. The airline has also expelled the early return of 10 out of 23 planes. Large airlines and LCC(Low Cost Carrier) are suffering from severe repercussions and their flight sections are concentrated in short distances, including Japan, China, and Southeast Asian countries. They are all directly affected by COVID-19. Furthermore, the LCC is weak in controlling the risk system, thus causing a significant financial problem. Meanwhile, Hana Tour, Modu Tour, Yellow Tour, and Main travel agency experienced many difficulties. They are planning to do paid vacation, 3 days working to solve the problem because it seems that new reservation falls down to 80% compared to last year.
Private business are also suffering from serious recession. Statistics show that after COVID-19, more shop owners will likely close their stores. The business district of Myeongdong, in particular, caters to foreign tourists; however, the rate of shutting down the stores are increasing because of the minimum wage and high rental fee. So far, sale expansion could recover through partnership with travel agencies. Since tourist attractions are no longer visited by tourists, it is difficult to maintain partnerships. Ms. Cho, who owns a restaurant in Gangnam, says that prior to COVID-19, the sales have always been higher than expected, but in March, the sales have dropped to 30 million won. The break-even point for a month is 7 million won. The fixed expenses included rental fee of 14 million won, personnel expenses of 18 million won, and maintenance cost of 8 million won. A lot of owners are thinking of selling their stores because they cannot cope with gross expenses. All the trades have stopped, so they experienced difficulties. They said that even if the COVID-19 situation improves, the financial situation would not be able to recover because the economy seems to progress slowly.
Meanwhile, admist COVID-19, online marketplaces are currently a lucrative venture, with the online market sales gross of 10% to 20%. Nowadays, Coupang, 11 street, SSG online markets are in demand. After COVID-19, The online platform would not be temporary, as it would extend to long-term with new customers.
Park Yoo-bin (ST Reporter)