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Economy to grow 3% and lead to GNI of $32,000

Dec 28,2017
The government Wednesday predicted Korea’s economy will grow by 3 percent next year, with per capita gross national income (GNI) breaking the $30,000 threshold for the first time.

The Ministry of Strategy and Finance said that 2018 “will be the first year of the $30,000 income era,” predicting per capita GNI will reach $32,000. GNI refers to the total amount of earnings produced by Korean nationals both at home and abroad. The more widely used indicator, gross domestic product (GDP), does not include earnings made by Koreans abroad.

“With 2018 as the first year of the $30,000 income era, the government will strive to improve people’s livelihoods by focusing on job creations and income growth,” said the ministry in its 2018 economic policy forecast.

If the country achieved the $32,000 milestone next year, it will mark the first time that Asia’s fourth largest economy busts the $30,000 barrier. This year, per capita GNI is $29,700.

While the government boasted about that economic milestone being approached, it acknowledged that the quality of life for Koreans has not matched the country’s economic prowess.

Korea’s place in the OECD’s life quality index fell to 29 out of 38 member nations this year, from 24th place in 2012.

“In our case, people’s quality of life has deteriorated despite a rise in people’s earnings. Growth without improved quality of life will not be sustainable down the road,” said the ministry.

Stressing that creating jobs for young people is a crucial element to elevating the quality of life, the government said it will spend 34.5 percent of the budget earmarked for employment support during the first quarter of next year, the largest amount ever committed during the period.

The government will also increase unemployment benefits to 60 percent of what an unemployed person earned previously, up from the current 50 percent.

Echoing President Moon Jae-in’s warning the day before that Korea must raise its low birth rate, the government announced it will offer tax cuts to small to medium sized firms that maintain women workers after their maternity leaves.

Korea’s dismally low birth rate stood at 1.17 births per woman in 2016. On Tuesday, the government told companies to increase salaries paid during maternity leave from 40 percent of ordinary wages to 50 percent and extended maternity leaves.

The government said it will expand tax cuts for companies that employ women whose careers have been cut short because of childbirth, without specifying details.

In the first 10 months of this year, 306,000 babies were born, 12.6 percent, or 42,500, fewer than last year’s 348,500 over the same period. It was the lowest number of babies born in that period since 2000, when the government began tracking the number.

BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]