Declining trade, sharp increase in household loans, financial instability, Real estate stimulus due to deteriorating balance of payments
As trade plunged in the second quarter, banks' household loans increased, and economic stimulus policies failed to resolve sluggish exports due to the interest rate gap with the US, stimulating the real estate market.
The Bank of Korea's indicators for the second quarter showed that exports fell by 1.8% and imports declined at an astoundingly fast rate of 4.2%, with growth of 1.3 percentage points in the trade-dependent economy.
Commercial bank household loans stood at 678.57 trillion won as of July 20, an increase of 324.6 billion won from 678.2454 trillion won in June.
Store loans increased by 143.1 billion won in May compared to the previous month, and exploded to 633.2 billion won in June, and July continues this surge.
The US is likely to raise its benchmark interest rate at the FOMC this week, and the interest rate gap with Korea is expected to increase by 2.0%.
Korea's private consumption and facilities and construction investment in the second quarter decreased by 0.1%, 0.2% and 0.3%, respectively, compared to the previous quarter, but government spending in particular decreased by 1.9%.
Park Sang-hyun, chief economist at HI Investment & Securities, told Reuters on the 25th that the second-quarter data was not as qualitatively positive as the figures indicated. "Growth will improve going forward, but it is too early to talk about a recovery as the sluggish Chinese economy may delay the recovery of exports, which are already weaker than previously expected," he told Reuters on the 25th.
The balance of home mortgage loans, including leasehold deposit loans, from the five major commercial banks increased by 938.9 billion won to 512.3397 trillion won by the 20th, and the increase of 1.7245 trillion won in June and 693.5 billion won in May continues to increase.
On the other hand, credit loans amounted to 108.5221 trillion won by the 20th of this month, a decrease of 406.8 billion won from last month, increasing real estate market funds.
The Bank of Korea’s second quarter real GDP showed a 1.3% increase in “net exports” compared to a slight increase in exports as imports decreased significantly compared to the first quarter, showing a typical example of an economy with a decline in trade.
The only positive (+) growth was limited to semiconductors and automobiles in exports in the second quarter, and petroleum products and transportation services decreased by 1.8%.
The sharp decline in imports, centered on crude oil and natural gas, is a sign of economic recession with a sharp 4.2% drop.
The electricity, gas, water and construction industries decreased by 6.0% and 3.4%, respectively, agriculture, forestry and fishery increased by 5.5%, computer, electronic and optical equipment by 2.8%, and service industry and transportation by 0.2%.
Real gross domestic income (GDI) in the second quarter was the same as in the first quarter, reflecting the worsening terms of trade.
Real GDP increased by 0.6% in the second quarter, but the profit structure deteriorated and total income remained stagnant.