Metro and Rural Areas Financially Disparate

The metropolitan economy has declined while the non-metropolitan, or rural, economy has done relatively well this year.

The Bank of Korea released their recent trends on the local financial economy on May 15, indicating that the increase in manufacturing and production in the metropolitan area (Seoul, Inchon and nearby Kyonggi Province) has declined during the first quarter of this year while the non-metropolitan area has held steady with high percentages.

The rural economy`s increasing rate of production (compared to the same period last year) dipped to 8.3 percent, compared to 10 percent in the previous quarter. The metropolitan economy saw its rate of production decline dramatically to 4.7 percent compared to 15.4 percent in the previous quarter.

In consumption, rural areas saw sales slide only slightly to 6 percent from 7 percent while metro areas suffered a greater decline from 5.4 percent to 1.5 percent.

In construction, the metro area`s construction approvals and orders decreased by 2.4 percent and 19 percent, respectively compared to the same period last year while rural areas recorded an increase of 10.5 percent and 22.5 percent in the same category.

The unemployment rate in the metro area increased 0.8 percent point to 4.2 percent while rural areas` unemployment rate inched up 0.6 percent point to 3 percent.

However, in terms of facility investment, the Business Survey Index, or BSI, in the metro area remained the same as the previous year at 95 while for rural areas, the BSI dropped to 93 from 99 in the previous quarter.

Capital flow in rural areas was worse than for that in the metro area. Bank loan-receival rate in the metro area increased from 6.4 percent to 11.6 percent while it dropped considerably from 6.9 percent to 1.7 percent in rural areas.

The rate for unpaid bills in rural areas stood at 0.08 percent while it reached 0.14 percent for the metro area.

Bank loans for corporations have considerably increased in both areas. The loan increase rate in the metro area and rural areas recorded 14.0 percent and 7.9 percent, respectively.

Kwu-Jin Lim mhjh22@donga.com