Economy Grows But Income Falls
By Na Jeong-ju
Staff Reporter
The real gross national income (GNI) fell 0.9 percent in the first quarter from a quarter earlier despite modest economic growth, showing economic growth is not translating into people's income, the Bank of Korea (BOK) said on Friday.
It is the first time that the real GNI, which measures people's purchasing power, has recorded a negative quarterly growth since the first quarter of last year. The real gross domestic product (GDP), the total output of goods and services, grew 0.9 percent during the January-March period, which is higher than the bank's earlier estimate of 0.7 percent.
The minus income growth against positive GDP growth shows people's income contracted although the economy expanded in the first quarter. This reflects worsened trade conditions, such as the won's appreciation against the dollar and high oil prices.
The central bank said the country suffered a loss of 18.5 trillion won in the first quarter because of changes in trade terms, compared with a 16 trillion won loss three months ago.
``The fall in prices of key export items, such as semiconductors, and oil price rises cut exporters' earnings,'' the bank said. ``We forecast the situation will get better in the second quarter and the income will grow at a faster pace.''
Year-on-year, the real GNI grew 3.4 percent in the first quarter, while the real GDP expanded 4.0 percent.
Hit by a stronger won and higher prices of raw materials, the manufacturing sector shrank 0.9 percent, the first negative growth since the first quarter of 2003. Construction and engineering grew 1.4 percent, while the service industry expanded 1.2 percent, the BOK said.
Both domestic consumption and corporate investment showed significant growths on the back of economic recovery.
Spending grew 1.5 percent during the January-March period as people bought more automobiles, TV sets, air conditioners and other durable goods. Facility investments by companies rose 4.4 percent, while construction investment also grew 0.8 percent.
The bank forecast economic growth will gain momentum in the latter half, and that the country will achieve an economic growth of 4.4 percent this year as earlier anticipated. Last year, the economy grew 5 percent.
It earlier said per capita income is expected to reach $20,000 late this year, if the economy grows by more than 4.4 percent and the won hovers around 930 won per dollar.