Private spending hits 4-year low

By Na Jeong-ju

The country’s gross national income (GNI), an indicator of people’s actual purchasing power, grew 0.8 percent in the first quarter from three months earlier, the Bank of Korea (BOK) said Friday.

This is the fastest growth in three quarters. The corresponding figures for the four quarters of last year were minus 0.1 percent, 1.5 percent, 0.7 percent and 0.3 percent, respectively.

In contrast to the income growth, however, private spending dropped 0.4 percent on-quarter, marking the sharpest fall since a 0.4 percent contraction tallied in the first quarter of 2009.

The GNI expansion in the first quarter is largely thanks to improved terms of trade and solid exports growth, the central bank said.

“The international prices of semiconductors and electronic goods are rebounding since February _ an optimistic sign for Korean manufacturers,” said Chung Young-taek, a BOK official.

The latest indicators suggest the gap between income growth and people’s spending could weigh on the government’s move to boost consumption. The sluggish spending has been cited as one of the root causes for Korea’s low growth.

The growth domestic product (GDP), the broadest measure of economic performance, grew slower than earlier forecast in the first quarter because exports growth slowed due to the yen’s slide.

The GDP grew a revised 0.8 percent in the January-March period from three months earlier, down from a previous estimate of 0.9 percent.

The first-quarter reading marked the fastest growth since the first quarter of 2012 and quickened from 0.3 percent on-quarter growth in the fourth quarter.

The yen has depreciated more than 14 percent against the U.S. dollar so far this year, worsening price competitiveness of Korean products in the global market.

Exports grew 3 percent on-quarter in the first quarter, compared to a 1.1 percent contraction in the fourth quarter of last year.

Facility investment gained 2.6 percent, down from an earlier estimate of 3 percent growth. Construction investment grew 4.1 percent, higher than the previous estimate of a 2.5 percent gain.