More than 1 million shop owners in South Korea shut down their businesses in 2024, marking the highest annual figure ever recorded in the country, according to official data cited by Seoul-based Yonhap News on July 6.

In 2024, 1,008,282 individual and corporate businesses filed for closure, an increase of 21,795 from the previous year.

The retail and restaurant industries made up nearly half of all businesses that shut down last year, according to data from the National Tax Service.

Before 2024, South Korea had never recorded over 1 million business closures in a single year since tracking began in 1995.

What’s the root cause?

Business closures in South Korea have been steadily rising since 2023, driven by a combination of factors. Official data points to an “accumulated slump” from the COVID-19 pandemic and rising delinquency rates linked to prolonged high interest rates.

At the heart of the crisis is declining profitability, with operating profit margins dropping sharply from 17.8 percent in 1991 and 11.5 percent in 2001 to just 1.7 percent in 2023.

The overall closure rate reached 9.04 percent in 2024, compared to 9.02 percent the year before.

Slumping sales were the most commonly cited reason for business closures, accounting for roughly half of the total.

According to Kim Kwang-seok, head of economic research at the Institute for Korean Economy, persistent inflation and high interest rates have eroded real income, leading to reduced consumer spending in retail and restaurants.

The impact has been especially visible in gas stations.

Nearly 1,000 gas stations have shut down nationwide over the past six years, with the number dropping from 11,499 in 2019 to 10,528 as of June 2025, showing a decline of 971 stations, according to KBS World.