Saving Rate for the Second Quarters – the Lowest Level for Last 20 Years

In this year, GNI is expected not to reach 10,000 dollars and gross saving decreased at the lowest level for last years as consumer spending increased in the second quarters (April – June).

According to the announcement of ‘Calculation of GNP for the second quarters’ of the Korean Central Bank at 10th, GNI increased to 110.3 trillion won by 6.2% compared to the same period of the last year. However it doesn’t reach the growth rate of the first quarters (7.7%).

The growth rate of GNI for the period was below than that of GDP (6.3%) and that of GDI (6.4%) for the period.

The Korean Central Bank analyzed that real GNI increased above 6% as domestic production such as finance & insurance, property, individual services, wholesale & Retails, hospitality, etc was activated and external trading conditions improved.

However, the growth rate of GNI was lower than the previous quarters as dividends, interest, salary, etc for foreign countries increased to 745.5 billion won by 35.4% compared to the same period of the last year.

Cho Sung-jong, senior offic3er for Economic Statistics of the bank forecasted “ If GNP per capita to be more than 10,000 dollars, economic growth rate should be at 7% and foreign currency rate for US dollar must be maintained at 1,100 won under stable consumer price circumstance.”

In the past, CNP per capita recorded more than 10,000 dollars in 1995, 1996 and 1997 as $10,823, $11,385 and $ 1,0315 per each.

For the second quarters, Gross Disposable Income increased by 6.2% compared to the same period of the last year. However, as consumer expending increased by 11.1%, gross saving rate recorded only 27.5%. The rate was the lowest level compared to same periods of last 20 years since 1982 (24.9%).

It is a numerical value to measure how much products and/or services can be purchased by income derived from production activities. Therefore, even if the amount of production is the same, if the export price decreases, the purchasing power for foreign products and services decrease. It is used as an index of real economic performance.

Sang-Chul Kim sckim007@donga.com