Staff Reporter
The Bank of Korea (BOK) said Friday that the nation's real gross national income (GNI), a barometer of the population's actual purchasing power, declined 0.2 percent in the first quarter of the year from the fourth quarter of last year, falling for the third consecutive quarter. The GNI also dipped 4.7 percent year-on-year, meaning that Koreans had less money to spend, invest and save than last year.
But the gross domestic product (GDP), the total value of goods and services produced within the economy, grew 0.1 percent during the January to March period from the fourth quarter of 2008. The increase was largely attributed to the government's aggressive fiscal spending aimed at bolstering domestic demand.
But GDP plunged 4.2 percent from a year earlier, the largest decline since the fourth quarter of 1998 when it contracted 6 percent in the aftermath of the Asian financial market meltdown.
``When the GDP expands, the GNI normally goes up. But in the first quarter, the trade terms of Korean exports deteriorated because of sluggish sales on overseas markets. They could not raise export prices. Also, income earned from abroad decreased sharply, putting less money into the pockets of consumers,'' a BOK official said. Trade surpluses have been continuing since February but a closer look at the details shows that exports declined but imports marked even steeper falls amid the weaker won.
He said unlike the latter half of 2008, commodity prices and the foreign exchange rate were not the main culprit behind weakening domestic purchasing power. Last year, surging prices of oil and other raw materials, along with a weaker won against the dollar, worsened the trade terms and slashed Korea's GNI sharply.
The central bank said manufacturing-sector production dropped 3.4 percent from the previous quarter, while the construction industry expanded 5.9 percent. Outbound shipments, which account for about 60 percent of the economy, fell 3.4 percent in the first quarter from the October-December period of last year.
Private consumption grew 0.4 percent but facility investments tumbled 11.2 percent. The nation's gross savings, the ratio of national savings to gross national disposal income, came to 29.3 percent, down from 30.4 percent in the fourth quarter of last year. It was the lowest since the fourth quarter of 2001 when the rate stood at 29 percent.
The central bank projected that Asia's fourth largest economy will contract 2.4 percent in 2009, due to sluggish exports, domestic consumption and private investment. It froze its key interest rate at 2 percent for the third straight month in May after slashing it by a total of 3.25 percentage points from October to February.
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