South Korea stimulates spending.

South Korea is working hard to combat higher oil prices with programs designed to stimulate consumer spending. The programs range from tax breaks to increased government spending, and according a July 26, 2005 news release issued by the Bank of Korea (BOK), South Korea's central bank, the programs are having some success.

The BOK said that real GDP increased 3.3 percent in the second quarter of 2005 compared with the second quarter of 2004.

Private consumption figured prominently in the strength of the GDP numbers. The BOK said that this line in the country's accounting of expenditures increased 2.7 percent in the second quarter 2005, also compared with the same quarter in 2004. It said further that the increase was attributable to household spending on durables, non-durables and services.

An Agence France-Presse (AFP) story citing the same release added some detail to what consumers were buying. In addition to the aforementioned services, the AFP said South Korean consumers bought more cars and computers.

The AFP also said that increased consumer spending made up for a slowdown in exports during the first half of 2005.

A Bloomberg News story earlier in July said that there was real worry about consumer spending on the part of the government because consumers had over-used available credit and during the past two years many consumers were unable to meet their debt obligations and had to cut back on spending.

State run firms were key to the government spending stimulus. Bloomberg said that the government "encouraged" these firms to spend more.