Economic slump continues to be felt
The gross domestic product (GDP) of South Korea for the third quarter bested the previous quarter's figure, but individual income has seen little growth. The growth rate of the gross national income (GNI), a gauge of the country's real purchasing power, was below that of the GDP. It shows that the economic slump felt by citizens has become more serious amid a continuing economic slowdown. Kwon Oh-gyu, deputy prime minister and minister of finance and economy, declared a month ago that the national economy had entered a phase of depression. According to data announced by the Bank of Korea (BOK) on December 1, the GDP recorded a 1.1-percent growth during the third quarter this year from three months ago. When calculating this by annual rate, the GDP posted about a 4.4-percent growth, an increase of 4.8 percent from the same period last year. This growth, larger than was anticipated, was due to the strong performance of South Korean semiconductors and automobiles in overseas markets and active investment in facilities and construction by firms. The central bank predicted that the GDP growth of this year would attain its 5-percent target. The GNI, however, stayed flat in the third quarter, meaning the country's real purchasing power was same as that of the previous quarter. During the second quarter, the GNI recorded a 1.4-percent growth, temporarily surpassing GDP growth of 0.8 percent. Except for that short period, the GNI growth was continuously lower than that of the GDP. During the third quarter, in particular, exporters' loss, due to a drop in sales prices and an increase in other costs, was the biggest-ever at 18.9 trillion won (US$20 billion), due to worsened conditions. Specifically, the BOK mentioned decreased prices of main export items, such as semiconductors and increased prices of basic raw materials, including oil. The GNI is expected to grow slightly in the fourth quarter, owing to oil prices, which have stabilized.Considering GDP growth alone, this projection may be a little higher than the potential growth rate of slightly less than 5 percent, but with no equivalent growth in the nation's GNI, very few are feeling the change and remain pessimistic. While exports have enjoyed the highest-ever boom for the past few years, domestic consumption is still weak, and housing prices continue to go sharply upward. Please direct questions or comments to [englishhani@hani.co.kr]
