South Korean President Moon Jae-in has been hit hard by the China-US trade dispute. Photo: AFP / Diego Opatowski

South Korea grew by a six-year low of 2.7% last year, but national per capita income exceeded US$30,000 for the first time, according to data released by the Bank of Korea, or BOK, Tuesday.

The 2018 GDP growth rate was the lowest in six years – down from 3.1% in 2017, 2.8% in 2016,  2.8% (again) in 2015, 3.3% in 2014, 2.9% in 2013 and 2.3% in 2012. Still, the data was no surprise: The BOK had predicted the figure last year, having downgraded earlier estimates.

However, per capita gross national income, or GNI, reached $31,349 last year, up 5.4% from the $29,745 tallied in 2017, Yonhap news agency reported. South Korea passed the $20,000 GNI baseline mark in 2006.

That should be good news for a country that is 50% reliant upon trade, as it indicates higher consumer spending power to boost the economy domestically.

Last year, exports rose 4.2%, well up from a 1.9% increase in 2017, Yonhap noted. In line with rising national incomes, spending rose 2.8% – the highest rate in seven years – while state spending jumped by 5.6% as the government sought to boost the economy.

But South Korea suffered from a drop in facility investments in 2018, hitting a nine-year low of 1.6%, on the back of a cyclical downturn in semiconductors, a key sector for the economy. And construction investment slid 4% on the back Seoul’s efforts to calm down a bubbly real estate market – always a sensitive political issue.

This year’s budget has been heavily front-loaded to take up the shortfall from the chip downturn and to hedge against the global trade risks stemming from the cross-Pacific tariff war.

For 2019, early consensus estimates for annual GDP growth are in the 2.6-2.7% range, with expectations for a slow first half being followed by an upturn in the second half.

While the GNI figures will no doubt be welcomed by the Moon Jae-in administration, the government is facing new pressure. Following the Hanoi summit between North Korean leader Kim Jong Un and US President Donald Trump, which ended with no deal, the government is going to face an uphill struggle pushing forward its flagship policy, which has been North Korean engagement. But without sanctions relief, the South is unable to proceed to economically engage the North.

Meanwhile, negative economic perennials – abusive and over-powerful conglomerates, high household debt, rising youth unemployment and the highest senior citizens’ poverty rate in the OECD – continue to hover over Seoul as major policy challenges.

And regardless of the GNI increase, small and medium-sized enterprises are suffering from rising minimum wage rates – a key Moon initiative – which they say make it too expensive to hire and retain staff.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Join the Conversation

24 Comments

  1. Hello, i think that i noticed you visited my site so i came
    to return the prefer?.I am attempting to in finding issues to enhance my web site!I suppose
    its adequate to make use of a few of your concepts!!

  2. Hi, i read your blog from time to time and i own a similar one and i was just wondering if
    you get a lot of spam feedback? If so how do you
    reduce it, any plugin or anything you can recommend?

    I get so much lately it’s driving me insane so any support is
    very much appreciated.

  3. Hello There. I found your blog using msn. This is an extremely well written article.
    I will be sure to bookmark it and come back to read more of your useful information. Thanks for the
    post. I’ll definitely comeback.

  4. Hi, I do believe this is a great site. I stumbledupon it 😉 I’m going to come
    back once again since I bookmarked it. Money and freedom is the
    best way to change, may you be rich and continue to guide others.

  5. Can I simply say what a relief to find an individual who actually
    knows what they are talking about on the web. You certainly understand
    how to bring an issue to light and make it important.
    More and more people should read this and understand this side of the story.

    I was surprised you are not more popular because you most certainly have the
    gift.

  6. Oh my goodness! Amazing article dude! Thank you so much, However I am having problems with your
    RSS. I don’t know why I can’t join it. Is there anyone else having identical RSS issues?
    Anybody who knows the solution will you kindly respond?
    Thanks!! natalielise plenty of fish

  7. I wanted to thank you for this very good read!! I definitely loved every bit
    of it. I have got you book-marked to check out new things you
    post…

  8. First of all I would like to say excellent blog!
    I had a quick question which I’d like to ask if you don’t mind.
    I was interested to find out how you center yourself and clear your head prior to writing.
    I have had a difficult time clearing my mind in getting my thoughts out.
    I do take pleasure in writing but it just seems like the first 10 to 15 minutes are generally wasted
    just trying to figure out how to begin. Any ideas or tips?
    Many thanks!

  9. I believe that is one of the so much significant info for me. And i am satisfied reading your article. But should commentary on some normal issues, The web site style is wonderful, the articles is actually nice : D. Good job, cheers|

  10. I haven’t checked in here for some time since I thought it was getting boring, but the last few posts are great quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂

Leave a comment

Your email address will not be published. Required fields are marked *