Real Gross National Income Down 0.7% in Q3... First Decline in 5 Quarters

Overseas Income Decline Combined with Inflation Rise
Investment Slump Leads to 0.3% Q3 Growth Rate
Q4 Growth Rate Focuses on 'Omicron' Variable

[Asia Economy Reporter Jang Sehee] South Korea's real Gross National Income (GNI) growth rate for the third quarter turned negative for the first time in five quarters. The Gross Domestic Product (GDP) growth rate recorded only 0.3% growth compared to the previous quarter. To achieve an annual growth rate of 4.0%, the fourth quarter growth rate is estimated to need to exceed 1.03% quarter-on-quarter.

According to the "Preliminary National Income for the Third Quarter" announced by the Bank of Korea on the 2nd, the third quarter GNI decreased by 0.7% compared to the previous quarter, marking the lowest level since the second quarter of last year.

GNI refers to the income earned by Korean nationals during a specific period, calculated by adding the income Koreans earned abroad and subtracting the income foreigners earned in Korea (net primary income from abroad) from GDP.

The Bank of Korea explained, "The real net primary income from abroad decreased, causing the GNI growth rate to fall below the real GDP growth rate."

Nominal GNI increased by 0.1% compared to the previous quarter. The Bank of Korea explained that nominal GNI growth rate was lower than the nominal GDP growth rate (1.4%) because nominal net primary income from abroad, such as dividends, decreased from 9.5 trillion won to 3.2 trillion won within three months.

The preliminary GDP growth rate for the third quarter of this year was 0.3%, the same as the flash estimate released on October 26. Looking at this year's trend, growth slowed from 1.7% in the first quarter, 0.8% in the second quarter, to 0.3% in the third quarter. To achieve an annual growth rate of 4.0%, the remaining fourth quarter must grow by more than 1.03% compared to the previous quarter.

The contributions of private consumption, construction investment, and facility investment to the third quarter growth rate all declined. This means consumption and investment negatively affected the third quarter growth rate. Private consumption decreased by 0.2% due to sluggish services such as food and lodging, and entertainment and culture, although non-durable goods like food and beverages increased. However, this was revised upward by 0.1 percentage points from the flash estimate. Construction investment and facility investment decreased by 3.5% and 2.4%, respectively. Exports increased by 1.8% due to rises in coal and petroleum products, machinery, and equipment, while imports decreased by 0.7 percentage points due to a decline in automobiles.

Experts agree that the economic outlook for next year could also be affected by factors such as the Omicron variant of the virus.

Jung Kyu-cheol, head of the Economic Forecasting Office at the Korea Development Institute (KDI), said, "Since it is already early December, it seems likely that the annual 4.0% growth will be achieved, but the uncertainty of next year's economy has increased. The impact of Omicron on the economy may vary depending on analysis, but if quarantine systems are strengthened and lockdown measures continue in various countries, exports and consumption could decline."

This content was produced with the assistance of AI translation services.