SEOUL (BLOOMBERG) - South Korean President Moon Jae In has declared Oct 2 as a one-time holiday, effectively extending the annual Chuseok holiday to 10 days, in a move to boost domestic spending.
Chuseok is a three-day harvest festival celebrated on the 15th day of the eighth month of the lunar calendar, which falls on Oct 4 this year. It is also known as the Korean Thanksgiving Day.
Many South Koreans, however, are looking overseas for their holidays this year, booking more flights out of the country than they did last year.
Online travel agency Interpark Tour said purchases of airline tickets to overseas destinations have more than doubled compared with the same, shorter holiday in September 2016.
"Usually, overseas trips are mostly to nearby countries, but this time tickets to the US and Europe have accounted for about 40 per cent," said Mr Frank Lee, a manager at Interpark's public relations office, who noted that the number of travellers could still rise, given that the holiday is still more than two weeks away.
South Koreans were travelling overseas more even before North Korea raised geopolitical tensions with its recent missile launches and a nuclear test.
A record-setting 2.39 million went abroad in July. Demand for overseas trips tends to surge when a nation's per capita income rises above US$20,000 (S$26,876), and has risen unusually quickly in South Korea, said Kim Man Jin, the head of Korea Tourism Organisation's international tourism strategy team. "We expect more than 26 million South Koreans to travel abroad this year, which is a large number at more than half of the total population of around 51 million," Kim said.
The extended Chuseok holiday may have prompted the big jump in overseas travel during this year's holiday. Because South Korea is rather small, people tend to take shorter trips at home and go abroad for longer ones, Kim said.
Meanwhile, inbound tourism slumped 21 per cent during the first seven months of the year, partly a result of China's ban on package tours in retaliation for Seoul deploying the US Thaad missile-defence system, and at an estimated loss to South Korea of US$3.3 billion in tourist spending.
Tourism arrivals fell 41 per cent in July alone, as tensions with North Korea heated up. This has swelled South Korea's trade deficit in services, which in July more than doubled from a year earlier to US$3.29 billion.
Extending holidays can also increase domestic retail sales and services output, which is one reason the government does it.
When former president Park Geun Hye designated May 6 a one-time holiday in 2016, bridging the Children's Day holiday and the weekend, department store sales increased 16 per cent from the same holiday period a year earlier, according to the Finance Ministry.
However, the overall positive impact on the economy is offset by declines in companies' output during the additional days off.