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By Lee Hyo-sik
Staff Reporter
South Korea is seeing its global economic status deteriorate amid the rise of Russia, Brazil and other developing nations, while losing a greater amount of money in trade with other economies. Skyrocketing oil and other imported commodity costs, on top of the weak won, have raised the costs of goods and services here to a 10-year high, reducing private consumption and discouraging corporate investment and job creation.
According to the Bank of Korea (BOK) and the World Bank, Friday, South Korea's gross national income (GNI) fell one notch to 13th among 209 economies in 2007 from a year earlier as Russia jumped two notches to 11th on rising earnings from strong exports of oil and other natural resources amid high global demand. In 2005, Brazil became the world's 11th largest economy, pushing Korea down by one spot to 12th.
Russia's nominal GNI increased to $956 billion in 2007 from $857 billion the previous year, the world's 13th largest. The bank compiled the statistics from the ``World Development Indicators 2007'' report released by the World Bank.
``Russia earned a huge amount of oil dollars last year as its exports of oil and other raw materials generated larger income because of surging international crude prices. Korea's drop in the global ranking does not mean that its fundamentals worsened as its income rose at a sustainable pace,'' a BOK economist said.
Korea's per-capita GNI ranked 49th at $19,690, up two notches from 51st in 2006. The country still lagged behind its Asian rivals ― Japan at 25th with $37,670; Singapore, 31st with $32,470; and Hong Kong, 33rd with $31,610.
Korea's nominal gross domestic product (GDP), the total value of goods and services produced in the country, amounted to $970 billion last year, up from $888 billion a year ago, remaining as the world's 13th largest economy for the second consecutive year.
The United States topped the list as the world's largest economy producing goods and services worth $13.8 trillion in 2007, followed by Japan with $4.38 trillion and Germany with 3.3 trillion.
South Korea lost greater money in trade with other economies in July as it paid more to import oil and other commodities amid rising prices, despite strong exports.
The Ministry of Knowledge Economy said Friday that the nation posted a trade deficit of $1.6 billion last month as exports rose 37.1 percent to $41.4 billion from a year earlier, while imports surged by 47.3 percent to an eight-year high of $43 billion.
The cumulative trade deficit for the first seven months of this year came to $7.8 billion, compared with a surplus of $8.4 billion over the same period last year.
Korea spent $13.4 billion in July to import crude oil and natural gas, up 93 percent from last year. The ministry said average prices for Dubai Crude, the nation's benchmark, reached $131.31 in July, up sharply from last year's average of $68.43.
Reflecting the higher prices of oil and other raw materials, consumer prices grew at their fastest pace in nearly 10 years in July, putting a heavier financial burden on businesses and households.
Consumer prices rose 5.9 percent last month from a year earlier, up from a 5.5 percent gain the previous month according to the National Statistical Office (NSO). The increase was the highest since November 1998 when prices jumped 6.8 percent. Seasonally adjusted inflation rose 0.7 percent from a month earlier.
The cost of living index, consisting of food and other daily necessities, jumped 7.1 percent from a year ago, meaning that consumers felt the inflation burden more heavily than the overall price increase. It was the highest level since May 2001 when prices also jumped 7.1 percent.
Core inflation, which excludes volatile food and fuel prices, rose 4.6 percent in July from a year earlier.
Prices of manufacturing goods increased 11.4 percent, reflecting a steep rise in oil and other raw material costs, while prices of agricultural, fisheries and livestock goods rose 4.6 percent.
Among 52 daily necessities under government watch, prices of 26 items increased, while those of 10 dropped and 16 remained unchanged.
leehs@koreatimes.co.kr
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