National Income Drops on Export Woes

Gross national income declined for the first time in a year as export conditions worsened.

Although economic index shows an upward trend, decreased GNI means that people’s purchasing power has dropped.

Also, there are growing concerns that it could be difficult to reach potential growth rate of 5.0 percent, as the first quarter GDP growth rate of 1.2 percent was lower than the estimated 1.3 percent.

According to Bank of Korea’s report released on Friday, the GNI, a key indicator measuring the country’s real purchasing power, fell 0.6 percent to 169.5 trillion won, year over year.

Real GNI fell for the first time in four quarters.

“The GNI fell due to worsened export conditions such as rising oil and commodity prices, and Korean won’s steep gain against the U.S. dollar,” said Choi Duk-jae of the BOK.

Real trading losses in the first quarter were a record-high 16.8 trillion won.

The BOK explained that real GDP growth in the first quarter is 1.2 percent year-on –year, and is 4.9 percent after adjustment of the average annual growth rate. If the Korean economy grows at this rate, it will be difficult to achieve 5.0 percent growth by year’s end.

Facility investment, in particular, fell by 0.4 percent. This is the first decrease since it fell 0.9 percent in the fourth quarter of 2004.

Suk-Min Hong smhong@donga.com