People walk around Bukchon Hanok Village in Jongno District, central Seoul, on July 28.YONHAP
Foreign visitors lifted Korea's economic growth by as much as 0.15 percentage points a year between 2022 and 2025, the Bank of Korea said Wednesday, with visits shorter and spending per head down compared to before the pandemic.
Tourism's direct value added came to 1.7 percent of nominal GDP in 2024, against an average of 3.6 percent across the Organisation for Economic Cooperation and Development and 3.5 percent globally.
Korea drew about 18.94 million foreign visitors last year, well past the prepandemic peak of 17.5 million in 2019, according to a BOK Issue Note titled "Growth Effects of the Tourism Industry from a Services Export Perspective and Policy Directions" on Wednesday.
The report credits the global recovery in travel, a weak won and interest in Korean culture. The first quarter of this year brought about 4.76 million visitors, the most in any quarter on record.
Money that foreign visitors spend inside Korea works in the same way as a services export. It generates value added across lodging, food, transport, retail and culture.
Department stores show the effect plainly. Hyundai Department Store said Wednesday that net sales at its department store division reached 643.8 billion won ($451 million) in the second quarter, up 9.1 percent from a year earlier and the most for any second quarter. Foreign customers at the three largest department store operators — Shinsegae, Hyundai and Lotte — spent more than 1.7 trillion won in the first half, also a record.
Tourism exports have added an average of 0.04 percentage points a year to growth since 2000. That climbed to 0.15 percentage points between 2022 and 2025, as inbound demand recovered in earnest.
People sit on bean bags at Dongdaemun Design Plaza in Jung District, central Seoul, on July 31.YONHAP
Visitor numbers have outrun the money they bring. Arrivals last year ran 8.2 percent above the 2019 peak, but tourism export receipts, measured as general travel receipts in the balance of payments, rose only 5.5 percent. Fewer Chinese group tourists pulled down spending per person, and more cruise passengers, who stay briefly, took their place.
Spending is also narrow. Shopping accounted for 43.3 percent of what foreign visitors spent in 2024, against 5.8 percent on medical care and 3.3 percent on culture and entertainment, both of which generate more value added. Visitors rarely traveled beyond Seoul and the greater Seoul area.
The report holds up Japan as the model. Japan has treated tourism as a strategic growth industry since 2003 and lifted its tourism exports to 1.46 percent of GDP last year, against 1.17 percent in Korea. Its policy focuses on raising the amount spent per trip, spreading visitors beyond a few hubs and improving the quality of the stay.
"To expand tourism exports to Japan's level, it is more effective to raise spending per person or lengthen stays than simply to gather more foreign visitors," said Jeong Seon-young, who heads the Asia-Pacific economy team at the central bank's research department.
People spray water in Gwanghwamun Square in Jongno District in July 31.YONHAP
The report also models what better margins would do. If the share of spending on high value-added industries such as medical care rose from 17.2 percent to 35 percent, and value-added ratios improved by 10 percentage points in lodging, 5 percentage points in air transport and 8 percentage points in restaurants, the domestic value added generated would grow from 6.3 trillion won to 6.7 trillion won.
"Even in industries seen as low value-added, such as lodging and restaurants, value added can be raised by widening the choices available to tourists, through premium products and the like," Jeong said.
BY OH HYO-JEONG [cho.yongjun1@joognang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
