Money velocity in South Korea remains depressed despite record fiscal spending and low interest rates as consumers withhold spending amid uncertainties from the coronavirus pandemic.

Demand deposit turnover hit an all-time low of 15.5 in August, the lowest since data compiling started in January 1985, according to the Bank of Korea on Tuesday. The previous record low had been 15.6 in May.

The turnover ratio of demand deposits, which divides withdrawals of demand deposits by the average deposit balance, shows how actively money is being circulated in the economy. A lower ratio means households and companies are more likely to park their money in banks rather than spend or invest.

The ratio had climbed in the 1990s but turned downward after peaking at 95.5 in July 1999. It has stayed below 30 since 2015, barely exceeding 20 in many cases.

Outstanding demand deposits in August reached 311.5 trillion won ($273 billion), up 23.7 percent from December 2019 before the coronavirus outbreak.

By Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]