Nervous South Korean Shoppers Empty Shelves

Shoppers stormed supermarkets and discount stores here Sunday, emptying some shelves of such staples as rice, sugar, cooking oil and diapers in anticipation of steep price increases triggered by South Korea’s worst postwar economic crisis.

“They’re shopping as if it’s the last time in their lives,” reported MBC Television news as its cameras panned over crowds of people with overflowing shopping carts waiting in long checkout lines.

“Due to selfishness, they are hoarding goods and food in advance of expected price hikes,” the popular program declared, adding: “This kind of selfishness may be a key reason why the South Korean economy is darkening.”

This morning, however, the stock and currency markets perked up. The composite stock index closed at 384.91, up nearly 7% from Saturday’s finish, while the currency market, which shed a breathtaking 27% of its value last week, closed the morning session at 1,667 won to the dollar, up from 1,710 on Friday.

Analysts said the rallies were a sign that panicky investors have been reassured by a $6.45-billion liquidity package announced by the government Friday, and by a pledge Saturday by all three major candidates in Thursday’s presidential election to honor the terms of the deal South Korea struck with the International Monetary Fund and other lenders in exchange for a $60-billion bailout.

After pouring a reported $200 million into the currency market Friday, a senior Bank of Korea official said today that the central bank is not intervening to prop up the won. “Right now, we do not have U.S. dollars enough to intervene,” said the official, who asked not to be named. But the central bank is supplying dollars directly to banks that need to repay short-term foreign debt and now have no dollars to hand over, the official said.

South Korea is often said to be the most Confucian of the Asian nations, and the government and media have been exhorting citizens to exercise self-discipline to help overcome the current crisis.

Koreans are being urged to practice self-sacrifice and voluntary austerity measures that include spending less, selling their foreign currency and buying only Korean-made products. And despite Sunday’s scenes of panic buying, most say they are complying. There have even been reports of big spenders being scolded by their compatriots.

Judging from the tone of the South Korean media, hoarders are also liable to be viewed with contempt.

“Halt the Panic Buying,” demanded an editorial in today’s editions of the Chosun Ilbo newspaper, one of the nation’s largest dailies. The editorial chastised hoarders, as well as shopkeepers who have jacked up their prices, for damaging the economy.

“If Koreans cannot get rid of the temptation to hoard due to anachronistic behavior, the country will be ridiculed and sincere help from the IMF may not be forthcoming,” the newspaper warned.

So far, the economic damage has primarily been limited to South Korea’s debt-ridden financial sector. But the manufacturers who are expected to rescue Korea’s economy with a flood of cheaper exports are highly dependent on imported raw materials.

As supplies run out, they will be forced to purchase new supplies with a currency that has lost more than half its value this year. Shipping firms and airlines, for example, are expected to be hard-hit because of their dependence on imported oil.

It was not clear Sunday how widespread hoarding has become. However, overcrowding forced some stores to limit the number of customers who could enter, while others ran low on popular nonperishable products such as instant noodles, toilet paper and flour.

Television footage from outside Seoul showed clear signs of recession: fewer than half the skiers on slopes than were there last year, deserted golf courses and a vast parking lot for a suburban safari park empty of cars.

As Koreans have seen their purchasing power dwindle, foreigners and Koreans whose salaries are pegged to the U.S. dollar have found their salaries suddenly worth at least 50% more.

Foreigners--including a number of off-duty American soldiers hoisting bulging shopping bags--jammed the stores of the fashionable Itaewon neighborhood of Seoul on Sunday, buying Christmas presents or snapping up designer goods and knockoffs.

“Are you enjoying Korea? It’s a lot cheaper now. This country is already ruined,” said Lee Do Hyung to a foreigner buying coffee in the swanky food court of the Lotte department store. Lee, a magazine publisher, said magazine and newspaper advertising revenues have plunged about 50% in the past month. “Big enterprises are cutting back, and the first thing to go is advertising,” he said.

Lee believes that South Korea’s future is now in America’s hands. “If Clinton wants to help the Korean economy, only he can,” he said.

The South Korean government is pressing foreign lenders and governments, especially the U.S. and Japan, to speed up disbursement of the $60-billion bailout package.

President Clinton is to meet Tuesday with IMF chief Michel Camdessus, Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Robert E. Rubin to discuss South Korea, according to the Yonhap news agency.

So far, the government’s pleas have fallen on unsympathetic ears, and on Sunday, President Kim Young Sam dispatched an unofficial envoy, Pohang Iron & Steel Co. President Kim Man Je, to the United States to lobby financial institutions and officials on South Korea’s behalf.

Bank of Korea officials are scheduled to brief IMF officials today on the measures already taken to try to stabilize the situation, the bank official said.

Sunday evening, in their third and final debate before Thursday’s presidential election, the three major candidates scalded one another with criticisms keyed to the nation’s financial woes.

Front-runners Kim Dae Jung, a longtime opposition figure, and former Supreme Court Justice Lee Hoi Chang traded well-worn charges of corruption, incompetence and deceit, and each pledged to rescue the troubled economy. Still, no new specific economic prescriptions were floated by the front-runners or by Rhee In Je, running a distant third in polls.

Lee has been focusing on accusing rival Kim of driving investor confidence even lower with his declaration--later retracted--that, if elected, he would seek to renegotiate the terms of the IMF bailout.

Kim’s camp has been claiming that an attempt by Lee’s party to borrow 55 billion won from an unofficial moneylender was illegal, an attempt to circumvent the campaign spending limit of 30 billion won. Lee insisted that his party isn’t raising enough donations from businesses and that it needed a loan.