NABO Economic Trends & Issues (No. 69)
Ⅰ. Economic Trends
Recently, the Korean economy has witnessed a moderate increase in exports, but as consumption momentum and investments weaken, overall domestic demand is weakening. On the employment front, employment conditions remain poor as employment by the manufacturing sector in June fell by a wider margin and overall employment since February exhibited a small increase of a little over 100 thousand. Consumer prices recorded a 1.5% increase yoy as price decreases of agricultural, livestock and fisheries products as well as the services sector were subdued. The won-to-dollar exchange rate increased significantly as US-China trade disputes threaten to aggravate and concerns spread about an economic crisis in emerging markets. Treasury bond interest rates decreased as the preference for safe assets increased due to heightened global uncertainty.
Ⅱ. Analysis of Overseas Spending by Koreans and Related Implications
Overseas spending by Korean residents is steadily increasing, exceeding the increase rate of domestic consumption. The proportion of overseas spending as a portion of private spending is on an increasing trend, and has contributed significantly to the overall private consumption increase rate. An international comparison revealed that Korea’s rate of overseas spending against national income is somewhat lower than the OECD average. When examining the overseas spending of each income class, those in the higher income class had a higher rate of overseas spending as a proportion of their overall household spending, and an empirical analysis concluded that exchange rates and incomes have a meaningful effect on overseas spending. Due to improved national income and the spread of leisure-focused lifestyles, overseas expenditure is expected to continue to rise. However, since such increases have limited effects on national economic growth, it is necessary to develop measures to convert overseas spending into domestic spending by strengthening the competitiveness of the services sector in areas such as domestic tourism and the education industry.
III. Employment Type and Marriage Decisions
Recently, the age of first marriage and first birth among young adults has exhibited a rising trend while the total birth rate has fallen in Korea. Giving up on marriage or delaying marriage are regarded as the main causes of lower birth rates. From 1995 to 2017, the average age of first marriage among males went up from 28.36 to 32.94, while the average age of first marriage among females rose from 25.32 to 30.24. During the same period, the total birth rate decreased by 0.46 children from 1.634 to 1.172. As a result of analyzing the 1st through the 19th study conducted by the Korean Labor & Income Panel Study, employment type appeared to have a significant impact on marriage decisions. Full-time workers had a 4.35% higher chance of getting married than temporary/daily workers, and regular workers had a 1.16% higher chance of marriage than irregular workers. Also, employees of a conglomerate with a large business scope had a higher chance of getting married than employees of small and medium-sized enterprises with a small business scope. Therefore, methods to ensure employment security for young adults should be considered as a key factor when establishing policies to increase birth rates.