NABO Industry Trends and Issues (No. 21)
Published on 26 June 2018
Published by Industry & Employment Analysis Division of the Economic Analysis Bureau
I. Household Income, Real Estate Market as well as Financial and Commodities Market Trends
(Household Income Trends) The monthly average per household (nominal) income for 1Q19 increased by 1.3% YoY, but the (nominal) disposable income which reflects a household’s consumption power decreased by 0.5%, while the income quintile share ratio which reflects the level of income disparity reached x5.80, x0.15p lower than that of the previous year.
(Real Estate Market Trends) In May 2019, house and apartment prices nationwide maintained a declining trend with volatility rates of –0.16% and –0.32% MoM, reflectively. Land price volatility from January to April 2019 increased by 1.20%, lower than that of the same period in the previous year (1.32%). Land transaction volume decreased by approximately 19.8% YoY.
(Financial and Commodities Market Trends) In the recent global financial market, global interest rates and stock markets both exhibited a declining trend amid rising risk indicators due to concerns about a potential aggravation of the US-China trade dispute. The exchange rates of major currencies against the dollar generally exhibited an increasing trend, except for the Japanese Yen.
II. Analysis of the Dynamic Effects of Sector-Specific Fiscal Expenditures according to Industry Categories
By using the CGE model, an analysis was conducted on the short-term (1st year) and mid-term (1st-5th year) effects of fiscal expenditures in five areas (public health & welfare, science & technology, SOC, industry SMEs, public & administration, & national defense) set out in the general direction of area-specific fiscal allocation in the National Fiscal Management Plan for 2018-2022, in order to strategically manage fiscal function. Based on the results, in terms of economic growth rate, the short-term effects of expenditures were high in the areas of public & administration & national defense while the mid-term effects were high in the areas of science & technology. In terms of improving income disparity, both short-term and mid-term expenditure effects were high in the areas of public health & welfare. The outcome of this analysis may serve as a reference for developing the National Fiscal Management Plan which sets out the direction of efficient resource allocation as well as estimating legislative costs.
III. Impacts of the Fiscal Expenditures of Basic Local Governments on Gross Regional Domestic Product
An analysis of the local governments’ financial settlement records and gross regional domestic product (GRDP) data over the period of 2003-2016 revealed that when the fiscal expenditure (total expenditure) of a basic local government increased by 1%, the region’s GRDP increased by 0.06%. The effects vary by the nature of fiscal expenditures: GRDP increased by 0.18% when that region’s current expenditure increased by 1%; and GRDP increased by 0.03% when that region’s capital expenditure increased by 1%. Analyzing the effects by fiscal expenditure function showed that, GRDP increased by 0.062% when the respective basic local government’s economic expenditure increased by 1%; and GRDP increased by 0.073% when expenditures on social welfare increased by 1%. The capital expenditure of local governments contribute to the GRDP over a long period of time because capital build up is needed for the expenditure to be effective. Therefore, it is necessary to analyze the long-term effects of capital expenditure on economic growth in future research.