Slowed Economy Still Cold As `Winter`

Although the gross national product has more or less increased, the national income remains the same. This indicates that people are not able to apply the benefits from the increased production due to the decrease in price for principal exports and rise in import prices.

Hankook Bank announced the `provisional national income estimate for the 3-4 quarter` on December 12 which states, "During the 3-4 quarter, real gross national income (GNI) was 104 trillion 23 billion won finishing at an increase of 0.2 percent than the same period last year. The growth rate of the gross domestic product (GDP) for the same period falls considerably short with 1.8 percent."

Real GNI is the calculated amount of income that the people of a nation make through production activities and the consequent consumption capacity. Although the rate of production is the same, dropping export prices will make it difficult to use the income to buy items in the foreign market. This is why the GNI is used as an indicator of a slowed national economy. The fall in memory chip prices in the 3-4 quarter led to worse conditions for trade and the `export loss` actually exceeds 18 trillion won.

Only since July and August has the trade conditions improved and the gap between the slowed economy and business indicator narrowed. The difference in the 3-4 quarter was 1.6 percent, a large improvement from the 5.6 percent gap in the same period last year.

The head of the economic statistics department of Hankook Bank, Chung Jung-Ho explained, "Recently, the principal export item, memory chips have risen in price and the principal import item, crude oil has fallen 30 percent since the terrorist attacks on the U.S., which may lead to improvements for the slowed economy."

Meanwhile, the total rate of savings was 27.8 percent, the lowest since the 22.3 percent in the 1-4 quarter of 1985 due to a large increase in consumer spending. Mr. Chung said, "The more advanced nations has higher rates of consumption and lower rates of saving. If, however, the rate of saving falls too quickly, the total savings rate will fall short of the total investment rate, which can negatively affect the current balance."

Lee Na-Yeon larosa@donga.com