The nation’s gross national income posted minus growth in the second quarter of the year, dropping 0.1 percent from the previous quarter, data from the Bank of Korea showed Thursday.
This is the first time in 4 1/2 years that the country marked negative GNI growth on a quarter-to-quarter basis, after the index fell below zero to -1.9 percent during the fourth quarter of 2010.
The GNI refers to the total domestic and foreign output claimed by residents of a country, including their salaries, financial interest and dividends on investments.
Korea’s GNI growth peaked at 4.2 percent in the first quarter of 2015 after ranging between 0.2 percent and 1.6 percent during the four quarters of last year.
The minus income growth is attributable to the continuous slowdown in expansion of the gross domestic product, which stayed at 0.3 percent during the April-June period over the previous quarter.
The nation posted GDP growth of less than 1 percent for the fifth consecutive quarter amid the protracted slump in private consumption and exports.
After peaking at 1.1 percent in the first quarter of 2014, GDP growth stayed below 1 percent the rest of the year — 0.5 percent in the second quarter, 0.8 percent in the third quarter and 0.3 percent in the fourth quarter. The stagnation has also continued over the past few months with GDP expansion staying at 0.8 percent in the first quarter of 2015.
The outbreak of the Middle East respiratory syndrome is estimated to have further undermined the ongoing weak consumer sentiment.
Private consumption fell by 0.2 percent compared to the first quarter in the wake of the MERS virus, which dealt a serious blow to the nation between May and June, said a BOK official.
In addition, a drought caused a 12.2 percent quarter-to-quarter drop in the output of the agricultural and fisheries sector. Exports and facilities investment inched up 0.1 percent and 0.5 percent, respectively.
The situation is raising the possibility that the nation could face a longer-than-expected low-growth period.
The central bank, which cut the benchmark interest rate to a record low of 1.5 percent in June, has revised down its outlook on 2015’s economic growth on-year, from an earlier 3.1 percent to 2.8 percent.
A large portion of think tanks have already expressed their gloomy outlook on the Korean economy.
Even the state-controlled Korea Development Institute had said that “should the problem of rapidly mounting household loans not be settled, the effects of the BOK’s rate cuts would be restricted.”
It said the doldrums in output of the manufacturing sector and the sagging exports have been major hurdles for overall recovery. For negative external factors, it cited a slowdown in China’s economic growth and widening uncertainty amid the looming quantitative tightening in the U.S.
The institute, nevertheless, predicted growth in the second half of the year could exceed that of the first, compared to the corresponding halves of 2014, respectively.
By Kim Yon-se (kys@heraldcorp.com)
