[EDITORIALS]False indicators of growthSouth Korea’s gross national income increased exactly 0 percent in the second quarter of this year, while its gross domestic product grew 3.3 percent during the same period, the slowest growth since the wake of the 1997-98 Asian financial crisis. Essentially, we are experiencing no substantial growth, since the actual income of Koreans remains the same. No wonder many ordinary folks feel the economy is still stagnant, despite the government’s announcements that economic indicators show signs of recovery.
Korea’s economic structure is very vulnerable to external changes. The margins of our major exports, such as semiconductor, cars, mobile phones and ships are rapidly shrinking amid fierce competition in the global market. The prices of many imported raw materials, particularly crude oil, are skyrocketing. Under such circumstances, we may end up with nothing no matter how hard we work and how many products we sell, since the money we earned through exports could wind up overseas. This is why the United Nations has been recommending since 1993 that nations use gross national income (GNI) rather than GDP as a new benchmark indicator for their economic health.
There is an obvious textbook solution to this problem: reduce the reliance on exports by boosting the domestic economy, while focusing on producing high-tech products, which could generate larger profits, with less dependence on raw materials. Enhancing our price-setting power in the international market by improving the competitiveness of our exports could be another way to tackle the current problems. We also need to secure a stable source of raw materials. But none of these things can be achieved overnight.
The 0-percent growth rate of the GNI in the second quarter teaches us two important lessons. One is that we are facing a difficult situation, as challenging as the 1997-98 Asian financial crisis. Unless every member of society recognizes the problem and works to meet the challenge, we will never find a way out. The second lesson is that it is time for us to make every effort and use every resource available to improve the economy. We can hardly expect to boost the economy simply by reviving domestic spending, as the real income level is stagnant. We may not even be able to achieve the economic growth rate of 4 percent, if this situation continues. But we cannot just sit down and wait.