National Accounts Office,
Research Department,
The Bank of Korea
Tel : 822-759-4364
Fax : 822-759-4387


NATIONAL ACCOUNTS 1998 (PRELIMINARY)



ECONOMIC GROWTH

     Economic Growth in 1998

     For the year of 1998 as a whole, Korean real GDP declined by 5.8 percent. This was mainly attributable to the slowdown of the exports increase and the slackness of domestic demand which persisted throughout the period, having become evident toward the end of November 1997 upon the outbreak of the currency crisis.

     Looking at GDP growth by kind of industry, the production of agriculture, forestry and fishing declined by 6.3%, badly affected by severe floods and storms. Manufacturing sector production fell 7.2% with the decline spread across almost all subsectors apart from semi-conductors and vessels. That of the construction industry slumped by 9.0% due to the steep decline in residential and non-residential construction. Services fell by 5.4% owing to the contraction of most subsectors except communications.

     Viewing GDP growth by component of expenditure, private consumption showed a 9.6% decrease, dragged down by the persistent reduction in household spending for almost all goods including automobiles and electronic products. Fixed capital formation registered a 21.1% decrease, reflecting the deterioration of investment in construction(-10.2%), and in machinery & equipment(-38.5%). Merchandise exports, in contrast, grew at a rate of 15.6% on a volume basis.


Growth Rates by Kind of Economic Activity and Component of Expenditure 1)
(at 1995 prices)

Unit : (%)

 

1995

1996

1997

1998 p

Year

1/4

2/4

3/4

4/4

Gross Domestic Income

8.9

6.8

5.0

-5.8

-3.6

-7.2

-7.1

-5.3

    Agriculture, forestry & fishing

6.6

3.3

4.6

-6.3

6.2

-3.5

-7.0

-9.0

    Manufacturing

11.3

6.8

6.6

-7.2

-4.6

-10.4

-9.1

-4.7

    Electricity, gas & water

7.5

12.0

11.5

-0.5

4.5

0.3

-4.1

-2.4

    Construction

8.8

6.9

1.4

-9.0

-3.9

-6.6

-10.1

-13.3

    Services

9.6

7.8

5.4

-5.4

-4.5

-7.4

-6.2

-3.4

    Final consumption expenditure

8.2

7.2

3.2

-8.2

-8.4

-9.7

-8.9

-5.8

      (Private)

9.6

7.1

3.5

-9.6

-9.9

-11.2

-10.4

-6.9

      (Government)

0.8

8.2

1.5

-0.1

1.3

-0.7

-0.6

-0.4

    Gross fixed capital formation

11.9

7.3

-2.2

-21.1

-20.6

-23.7

-22.2

-17.9

      (Construction)

8.0

6.1

2.3

-10.2

-5.9

-7.8

-12.0

-13.7

      (Machinery & equipment)

18.1

9.1

-8.7

-38.5

-38.3

-46.1

-39.3

-27.4

    Exports of goods & services

24.6

11.2

21.4

13.3

25.7

13.2

8.0

8.8

      (Merchandise)

25.2

10.6

21.5

15.6

27.1

16.5

9.5

11.5

    Imports of goods & services

22.4

14.2

3.2

-22.0

-27.2

-25.5

-25.9

-9.0

      (Merchandise)

21.0

13.8

3.1

-24.6

-27.7

-27.3

-28.7

-14.8

Gross National Income

8.1

4.8

2.1

-7.9

-6.8

-9.7

-8.6

-6.6

  1. Rates of change compared with the same period of the previous year.
  2. p : preliminary.

ECONOMIC SCALE AND PER CAPITA GNI

     Gross domestic product at current prices amounted to 449.5 trillion won, 0.8% down from 1997 GDP. In US dollar terms, though, it was just U$321.3 billion due to the steep depreciation of the exchange value of the Korean won. The Korean currency depreciated by 47.1% against the greenback taking the average over the year. Per capita GNI(Gross National Income), in US dollar terms, slid to U$6,823 from U$10,307 the year before.


GDP DEFLATOR

     The rate of increase of the GDP deflator stood at 5.3 percent. Its increase from the preceding year's 3.2 percent was attributable to the higher prices of manufacturing products as a result of the depreciation of the Korean won.


INDUSTRIAL STRUCTURE

     Looking at the country's industrial structure, the share of mining and manufacturing in GDP edged up to 31.0% from 29.3% the year before. But the share of the construction sector in GDP slipped to 10.1% from the preceding year's 11.6%. That of the agriculture, forestry & fishing sector, meanwhile, declined to 4.9% from 5.4% and that of services to 41.1% from 41.6%.


THE RATIO OF COMPENSATION OF EMPLOYEES TO NI

     The ratio of compensation of employees to NI(National Income) was 59.0%, somewhat lower than the 62.8% of the previous year, owing to wage reductions and the higher rate of unemployment.


SAVING RATIO AND INVESTMENT RATIO

     The gross saving ratio slipped somewhat, falling to 33.2% from 33.4% in the preceding year because of the reduction in saving by the government. The gross domestic investment ratio dropped sharply to 20.9% from 34.4 % in 1997 due to the reduction of inventories and the decrease in investment.


Principal Indicators on National Accounts

 

Unit

1995

1996

1997

1998 p

NATIONAL INCOME
 (at current prices)

 

 

 

 

 

    Gross domestic product (GDP)

billion US$

489.4

520.0

476.6

321.3

    

billion Won

377,349.8

418,479.0

453,276.4

449,508.8

    Per-capita Gross National Income (GNI)

US$

10,823

11,380

10,307

6,823

   

thousand
Won

8,345

9,158

9,803

9,544

    Increase rate of GDP deflator

%

7.2

3.9

3.2

5.3

PRODUCTION STRUCTURE
 (at current prices)

 

 

 

 

 

    Agriculture, forestry & fishing

%

6.2

5.8

5.4

4.9

    Mining, quarrying & manufacturing

%

29.8

29.3

29.3

31.0

       (Manufacturing)

(%)

(29.4)

(28.9)

(28.9)

(30.7)

    Electricity, gas & water

%

2.1

2.1

2.1

2.3

    Construction

%

11.3

11.6

11.6

10.1

    Services

%

41.0

41.3

41.6

41.1

    Producers of government services and
    non-profit services to households 

%

9.6

9.9

10.0

10.6

Ratio of compensation of employees to
National Income 

%

61.7

64.2

62.8

59.0

GROSS SAVING & GROSS INVESTMENT (at current prices) 

 

 

 

 

 

    Gross saving ratio

%

35.5

33.8

33.4

33.2

       Private

%

25.8

23.5

22.8

25.1

       Government

%

9.7

10.2

10.6

8.1

    Gross Domestic investment ratio

%

37.3

38.1

34.4

20.9

       (Gross domestic fixed investment ratio)

(%)

(36.8)

(36.9)

(35.2)

(29.6)

p : preliminary.





BASE YEAR REVISION OF NATIONAL ACCOUNTS



     The Bank of Korea changed the base year of National Accounts from 1990 to 1995 so as to reflect changes in economic structure and relative prices. In the rebased National Accounts, a number of new standards and concepts were adopted for implementing the 1993 SNA step by step.

     The Bank has initially released the time series from 1990 to 1997 and intends to complete the time series from 1970 to 1989 by the end of the year.

     The new time series applies the value-added rate and commodity appropriation ratio on the 1995 base, reflects the Industrial Production Index and Producer Price Index on the 1995 base, and uses many survey data such as the 1995 Input-Output Table.

     Real Gross Domestic Income and Real Gross National Income reflecting changes in the terms of trade have been newly introduced. The GNI and GDI will be used as income indicators and compiled quarterly in future. The growth rate of the agriculture, forestry and fishing industry has been compiled using the chain weighted method. In addition, a new classification system, namely, COICOP(Classification of Individual Consumption by Purpose) has been adopted.

     Under the benchmark year revision, the new figure for 1995 GDP at current prices stands at 377.4 trillion won(U$489.4 billion), 25.4 trillion won(U$32.9billion) higher than the figure calculated on the previous base year.

     GNI for 1995 at current prices is 488.1 billion dollars, and per capita GNI is calculated as 10,823 dollars, a rise of 786 dollars over the previous figure. The average growth rate from 1991 to 1997 according to the new time series is 7.0%, which is similar to the 7.1% of the previously utilized time series.


The Bank of Korea