Zero Percent Second Quarter GNI Growth

It was reported that Korean people’s incomes have decreased, although the Korean economy grew 3.3 percent in the second quarter (April to June) of this year.

The reasons are the worsening of trade terms due to high oil prices and considerable payments of incomes to overseas as dividends.

According to the “National Income in the Second Quarter (Tentative)” report released on September 2 by the Bank of Korea, growth of gross national income (GNI), which indicates actual buying power, stood at 0.0 percent, well below the gross domestic product (GDP) growth rate of 3.3 percent.

Moreover, although the report estimated the GNI growth rate at 0.0 percent, a precise calculation reveals that actual GNI in the second quarter amounted to 166.1456 trillion won, a 74.4 billion won decline from 166.22 trillion won in the corresponding period last year.

National incomes decreased for the first time since the fourth quarter (October to December, 6.1 percent drop) of 1998 when the economy posted negative growth in the wake of the financial crisis in the late 1990s.

With terms of trade worsening due to oil price hikes and semiconductor price drops, the country’s trade loss reached a record 10.3592 trillion won in the second quarter.

Trade loss in the first half (January to June) of this year reached 20.4348 trillion won, which was 84 percent of last year’s annual loss (24.224 trillion won).

Kyung-Joon Chung news91@donga.com