Has South Korea Seen a Record 1 Million Shop Closures in 2024?
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Synopsis
In a historic first, South Korea has witnessed over 1 million shop closures in 2024, primarily driven by the retail and restaurant sectors. This article delves into the reasons behind this alarming trend and its implications for the economy. Discover the factors contributing to this unprecedented situation and what it means for business owners.
Key Takeaways
- Over 1 million shop closures in South Korea in 2024.
- Retail and eatery sectors account for nearly half.
- Business closure rate reached 9.04 percent.
- Declining sales were the primary reason for shutdowns.
- High interest rates and inflation are impacting consumer spending.
Seoul, July 6 (NationPress) For the first time ever, the number of business owners who closed their shops has dramatically exceeded the 1 million threshold last year, with the retail and food service industries making up nearly half of this figure, according to data released on Sunday.
The statistics gathered by the National Tax Service revealed that 1,008,282 individual and corporate entities submitted closure filings in 2024, marking an increase of 21,795 compared to the previous year.
This milestone signifies the first occasion that business closures have surpassed 1 million since official records began in 1995, as reported by the Yonhap news agency.
According to the tax agency, business closures have been escalating since 2023, with the surge partly linked to an “accumulated slump” stemming from the COVID-19 pandemic and rising delinquency rates due to elevated interest rates.
The closure rate of businesses has also experienced an uptick since 2023, reaching 9.04 percent last year, a slight rise from 9.02 percent in the prior year, the agency noted.
The predominant reason cited for these business shut-downs was declining sales, which accounted for nearly half of all closures.
The retail sector has been particularly affected, comprising 29.7 percent of all closures, followed by the restaurant sector at 15.2 percent, real estate at 11.1 percent, and wholesale companies and commodity brokerages at 7.1 percent.
The closure rate for retail businesses was 16.78 percent, while restaurant businesses reported 15.82 percent and personal services 14.11 percent.
“Persistently high interest rates and inflation have diminished real income, resulting in a drop in retail sales and dining expenditures,” stated Kim Kwang-seok, the head of economic research at the Institute for Korean Economy and Industry.
In related news, South Korean stocks closed significantly lower on Friday as investors paused after recent gains, while keeping an eye on tariff negotiations with the United States. The local currency depreciated against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 61.99 points, or 1.99 percent, concluding at 3,054.28.
Point of View
The recent surge in business closures in South Korea reflects broader economic challenges that demand urgent attention. As a nation, we must prioritize support for struggling industries to foster recovery and resilience in the face of ongoing economic pressures.
NationPress
13/07/2025
Frequently Asked Questions
What is the main reason for the increase in shop closures in South Korea?
The primary reason for the increase in shop closures is declining sales, which accounts for nearly half of all closures, compounded by high interest rates and inflation.
Which sectors have been most affected by business closures?
The retail and restaurant sectors have been the most impacted, with retail accounting for 29.7% and restaurants 15.2% of all closures.
How many businesses closed in South Korea in 2024?
In 2024, a total of 1,008,282 individual and corporate businesses filed for closure.
What is the closure rate for businesses in South Korea?
The business closure rate reached 9.04% in 2024, slightly up from 9.02% in the previous year.
What factors contributed to the rise in business closures?
The rise in business closures is attributed to an accumulated slump from the COVID-19 pandemic and increasing delinquency rates due to rising interest rates.
