Income Grows Faster Than GDP
By Na Jeong-ju
Staff Reporter
The country's income growth surpassed economic growth for the first time in five years in the third quarter as South Koreans enjoyed more gains from investments in overseas stocks and bonds, the Bank of Korea (BOK) said Monday.
The real gross national income (GNI), grew 1.7 percent in the July-September period from a quarter earlier, down from a 2.2 percent rise in the second quarter. Year-on-year, the GNI rose 5.4 percent, up from a 4.7 percent growth in the previous quarter.
The rise in GNI means South Koreans saw an improvement in purchasing power.
Meanwhile, the real gross domestic product (GDP), the total output of goods and services produced in a country, expanded a revised 1.3 percent in the third quarter from three months earlier, down from an earlier 1.4 percent estimate on slower-than-expected private consumption growth and a dip in facility and construction investments.
The GDP growth in the July-September period decelerated from a 1.8 percent gain in the second quarter. From a year earlier, the GDP rose 5.2 percent in the third quarter.
It is the first time that the GNI growth surpassed the GDP growth since the third quarter of 2002. The central bank said the rise in GNI resulted from larger gains from overseas equity investments, but it is too early to say that the strong GNI growth will continue.
The bank expects the nation's per capita income to top $20,000 for the first time this year on the won's strength and gains from retail investor's investment in overseas funds.
For the past several years, people's actual income growth has fallen far behind the country's headline economic growth figures.
The GNI growth has remained below economic growth in most quarters since 1995. According to the National Statistical Office, average monthly household income in South Korea rose 3.5 percent year-on-year in the second quarter, compared with a 6.2 percent advance in the previous quarter.
Exports, which make up nearly 40 percent of the economy, increased 1.5 percent in the third quarter, as expected, on brisk outbound shipments of semiconductors and machinery. However, growth in private spending, one of the main growth engines of the South Korean economy, advanced 1.2 percent, down from the previous estimate of 1.5 percent.
Facility investments dipped 6.3 percent, more than 5.8 percent lower than earlier estimated, due to a plunge in machinery investment. Construction investments fell 0.5 percent, over 0.3 percent more than previously expected.
Service businesses grew a larger-than-expected 1.8 percent amid strong growth in the financial and insurance industries and a pickup in the transportation and logistics industries. But the construction sector sank 0.2 percent.