SEOUL Aug 23 South Korean households'
disposable income grew for a ninth consecutive quarter in annual
terms during the April-June period, data showed on Friday, but
consumption continued to fall as they dealt with heavy debt and
an uncertain outlook.
The average South Korean household saw disposable income
rise by a real 1.0 percent during the second quarter from a year
earlier, Statistics Korea said in a statement, picking up from a
0.3 percent rise during the January-March period.
South Koreans' disposable income -- total income minus
spending on non-consumption items such as tax -- has continued
to grow on an annual basis, after adjusting for inflation, as
the economy continued to add jobs despite the recent slowdown.
Household spending on consumption fell by 0.4 percent during
the second quarter from a year earlier despite the income
growth, however, marking the fourth consecutive quarter of
decline -- albeit at a slower rate than the 2.4 percent seen in
the first quarter.
The data suggests that South Korean households continue to
conserve cash in an attempt to reduce their debt and guard
against still-uncertain prospects for the global and local
South Korean households' leverage problem has been well
documented, with many struggling with the falling value of their
homes in a slumping property market.
The gross household debt to gross disposable income ratio
was 153.4 as of 2012, according to the Organisation for Economic
Co-operation and Development, well above the organisation's
average of 121.3.
Though a reduction in household debt will ultimately benefit
the country's economic fundamentals, continued weakness in
private consumption will constrain growth in the immediate
period as the trade-dependent economy awaits a firm pick-up in
The Bank of Korea expects the South Korean economy, Asia's
fourth largest, to grow 2.8 percent this year, accelerating from
2 percent seen last year. But analysts say such growth would
still be below the economy's potential growth rate, estimated to
be around 4 percent.
The Bank of Korea's composite consumer sentiment index stood
at 105 in July, holding steady from June, suggesting that South
Koreans remain optimistic about future economic and living
But government data also showed that July's sales at both
the country's top department and discount store chains fell in
annual terms for the first time in three months.
(Reporting by Se Young Lee; Editing by Eric Meijer)