The First Decline in 21Years
The Bank of Korea announced on Jan. 22 that South Korea’s real gross domestic income (GDI) fell 0.4 percent last year, showing a decline for the first time in 21 years.
Specifically, the real GDI fell 0.5 percent year on year in the first quarter of 2019, fell 0.6 percent and 0.7 percent in the following quarters, and edged up 0.1 percent in the fourth quarter. Previously, South Korea’s real GDI fell year on year in 1956, 1980 and 1998.
The Bank of Korea mentioned a deterioration in terms of trade such as a decline in semiconductor chip price as a major factor that resulted in the negative GDI growth. The negative growth means a decrease in the real purchasing powers of economic subjects such as enterprises and households. With their economic activities such as production and investment remaining stagnant, the South Korean government failed to increase the real GDI in spite of its policies for an increase in welfare spending and so on.
The Bank of Korea explained that South Korea’s gross national income (GNI) per capita for last year is estimated at US$32,000. For reference, it rose to US$33,434 in 2018, breaking the US$30,000 mark for the first time. The bank also said that the South Korean economy grew 2 percent last year and its nominal gross domestic product (GDP) growth for last year is estimated at less than 2 percent due to low prices.