NABO Industry Trends and Issues (Issue No. 3)
I. Household Income and Real Estate Market Trends
(Household Income) The monthly average income per household in the third quarter of 2017 increased by 2.1% year-on-year, due to the increase in ordinary income including wage income (1.6%) and business income (6.2%). The number of households at risk of falling below the poverty line increased by 0.9%p in 2016 compared to 2015, deteriorating in line with all other indicators showing the distribution level between income brackets (increases seen in: the Gini coefficient 0.012, income quintile share ratio 1.08 times, and relative poverty rate 0.9%p)
(Real Estate) The housing transaction price at the end of October 2017 increased by 1.5% year-on-year, whereas the cumulative housing transaction volume decreased by approximately 60,000 units compared to the same period of the previous year (between January and October.) As of the end of October 2017, Jeonse (Key Money Deposit) prices increased by 0.8% year-on-year, while transaction volume increased by about 30,000 units compared to the same period of the previous year (between January and October.)
Ⅱ. Analysis of Korea-U.S. Export Competitiveness of the Items Subject to U.S. Safeguard Ruling
The U.S. is expected to determine safeguard measures against solar panels and washing machines in January and February 2018, respectively. The impact of the safeguard on American industries and consumers was analyzed through a comparison of Korea-U.S. export competitiveness of the subject items. According to analysis, the Korean-made products have export competitiveness as the market share of Korean-made solar panels in the U.S. market increased from 5.7% (in 2012) to 12.9% (in 2016), while Korean-made washing machines represent 35.2% (in 2016) of the U.S. market, on a par with the market’s #1 brand Whirlpool.
Ⅲ. Impact Analysis of the Energy Mix upon Energy Policy Transitions
The government announced the Energy Policy Transition (22 Oct), on the topic of phasing out nuclear energy by halting the construction of 6 new nuclear reactors and prohibiting the life extension of outdated ones, while expanding renewable energy sources. The energy policy of scaling back construction of nuclear and coal-fired plants while expanding the development of gas and new renewable energy is being pursued by major OECD member countries such as the U.S., E.U. and Japan. The Energy Policy Transition determines the number of generation facilities which have effects on the energy mix in the long term. Therefore, when establishing a plan, factors such as the uncertainty of electric power demand and diversity of reactor facility options should be taken into consideration from a comprehensive perspective.
Ⅳ. Analysis of Factors behind Sluggish Private Consumption by Income Class
Korean households’ propensity to consume has been steadily declining since 2010, allegedly due to structural factors that restrict consumption such as household debt, high cost of living and aging. When employment instability is added to the factors and such claims are analyzed, it was found that employment instability restricts the household consumption expenditure of the mid-to-high level income class. In order to boost domestic demand, in addition to encouraging consumption by the low income class by improving income distribution, a prudent policy review should be made for each income class regarding the structural determinant factor for consumption, such as employment instability and household debt.