Our country’s exports have been on the rise for 11 months, and domestic and foreign organizations are predicting that our country’s annual growth rate for this year will be in the mid-2% range. However, everyone around me is complaining that the economy is not doing well and that things will be difficult.
The Bank of Korea pointed to the fact that despite the brisk exports, the warmth is not being transmitted quickly to domestic demand, the high perceived price level, the increased interest burden due to high interest rates, and asset inequality due to the rise in housing prices centered in the metropolitan area as the reasons.
According to the Ministry of Trade, Industry and Energy’s ‘August Export and Import Trends’ on the 7th, exports last month increased by 13.9% to $57.9 billion, the largest export amount ever recorded in August. Semiconductors increased by 38.8% year-on-year to $11.9 billion, the largest performance ever in August, and the trade balance continued to be in the black for 15 consecutive months.
The problem is that despite the export boom, the perceived economy is sluggish. According to the Bank of Korea’s consumer trend survey, consumers’ current economic assessment in August was 73, which has been below 100 for several years. If the consumer sentiment is above 100, it is interpreted that the view that the economy will improve compared to the long-term average is dominant, and if it is below 100, the negative view is dominant.
Lee Jong-woong, deputy head of the research team at the Bank of Korea’s research bureau, and researcher Kim Yun-jae, started research based on the fact that the actual economic conditions perceived by economic entities are worse than economic indicators, and published a book titled “The Shadow of Economic Indicators: Numbers You Can’t Feel” on the Bank of Korea’s own blog.
They first cited the difference in the speed of recovery between exports and domestic demand as the cause of the economic slowdown. They said that as industries were reorganized around semiconductors after the global financial crisis, the impact of exports on employment and households was weakened, and as direct investment such as overseas plant construction increased, the warmth was not being delivered to domestic consumers.
It was pointed out that high living expenses also lowered the perceived economic sentiment. The analysis is that due to low import openness and high transaction costs, the prices of essential consumer goods such as food increased significantly compared to other products during the recent surge in prices, and the burden of prices on low-income and elderly people, who spend a high proportion of their consumption on food, clothing, and shelter, was greater than that on high-income households.
High interest rates are also a cause of the worsening economic sentiment. In Korea, household debt has increased rapidly since 2020, especially among people in their 30s and 40s. The explanation is that the high interest rates added to high household debt have significantly increased the burden of repaying principal and interest on households, which has led to a contraction in the economic sentiment.
In addition, the deepening of asset inequality due to the rise in housing prices centered in the metropolitan area is also cited as a cause of the worsening of the perceived economic situation. The analysis is that the relative deprivation between classes has increased as the degree of asset inequality centered on real estate has rapidly deepened in the short term, which has contributed to the relative slowdown in the perceived economic situation.
However, the authors predicted that the perceived economic slump would ease as exports gradually spread to domestic demand and the trend of price slowdown continues. The consumer price inflation rate in August decreased to 2.0% compared to the previous month. However, since there are also structural effects, the perceived economic slump is expected to improve at a gradual pace.
The authors said, “In order to restore the perceived economy, we must not only implement short-term economic countermeasures, but also implement structural reform policies such as balanced development of export and domestic industries, stabilization of price levels through efficient distribution structures, and stable management of household debt.”
[서울=뉴시스]
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2024-09-07 20:05:45