[비즈한국] With the semiconductor boom leading the OECD, the Asian Development Bank (ADB), and now the International Monetary Fund (IMF) to raise South Korea's growth forecast to the 3% range this year, expectations are growing that the era of $40,000 per capita national income is within reach. As the semiconductor boom boosts household income, private consumption is also rising, contributing to overall economic growth.
However, because the income growth driven by the semiconductor boom is limited to select industries, private consumption is expected to gradually cool down. Observers point out that income disparities between industries, as well as demographic shifts such as an aging population, will lead to a decline in consumption and could negatively affect future growth rates.
President Lee Jae-myung stated on the 21st of last month while presiding over a meeting of senior secretaries, "I feel a heavy sense of responsibility regarding the voices of the people who say that improvements in economic indicators are not being sufficiently felt as practical changes in their daily lives." On the 30th, he shared a link to an article about chicken prices on X (formerly Twitter), noting, "Thank you for the good article. I will look into this." He was signaling that he would examine the situation where the prices of chicken—a popular food for the general public—remain unchanged despite a drop in the price of broiler chickens.
Perhaps due to President Lee's determination to stabilize consumer prices, government ministries are also moving quickly. The Korea Fair Trade Commission (KFTC)’s Task Force for Priority Investigation, launched on the 1st, designated the issue of price-fixing by food companies, which significantly affects the public's cost of living, as its first case and launched an investigation. On the 14th, the task force dispatched investigators to conduct on-site probes into food companies such as Daesang, Ottogi, and CJ CheilJedang, having captured evidence that they had engaged in price-fixing for years on products such as processed kimchi, tofu, oils, gift sets, instant rice, and sauces.
The government is focusing on curbing consumer prices because it recognizes that the general public is still struggling to feel the recent trend of improving consumption. The National Assembly Budget Office predicted that the private consumption growth rate, which was 1.5% last year, would rise to 2.3% this year thanks to the semiconductor boom. However, it projected that the growth rate would begin to fall to 2.0% in 2027, then remain at 1.8% in 2028, 1.9% in 2029, and 1.9% in 2030.
The significant jump in private consumption this year is due to the increase in semiconductor manufacturing sales, which led to higher wages for workers in related industries. In fact, due to the strong semiconductor market, special bonuses for regular employees in the electronic components, computer, and communications equipment manufacturing sectors rose significantly. While the fixed salaries for regular employees in these industries only increased by 1.4% year-on-year in the first and second quarters of this year, their special bonuses skyrocketed by 62.8% in the first quarter and 106.7% in the second quarter, thanks to the semiconductor boom.
Conversely, in the construction industry, which has been suffering from a recent slump in real estate, both fixed salaries and special bonuses decreased by 25.2% in the first quarter and 3.1% in the second quarter. In short, the gap in disposable income among workers across different industries is severe.
Under these circumstances, it is inevitable that the public cannot feel the statistics suggesting that consumption has improved. If the income gap between industries becomes entrenched, consumption is also likely to show a K-shaped polarization. Even if consumption for the economy as a whole is healthy, the difference in how much money workers in various industries can spend is widening.
Moreover, considering that the recent increase in income stems from higher special bonuses, it is highly likely that workers in the electronic components, computer, and communications equipment manufacturing sectors will find it difficult to maintain this year's income level, leading to a decrease in their consumption. This is also why the private consumption growth rate is expected to peak this year before declining.
Furthermore, the fact that the average propensity to consume (the ratio of consumer spending to disposable income) peaks in the 50s and declines from the 60s onward is cited as another reason for the weak outlook on private consumption. According to the National Statistical Portal, the average propensity to consume by age of the head of household in the first quarter of this year was 67.6% for households 39 and under, and 73.9% for households in their 40s. Households in their 50s had the highest average propensity to consume at 75.2%. People in their 50s are actively spending and driving consumption.
However, for households aged 60 and older, the average propensity to consume dropped to 69.2%. As the proportion of the elderly population aged 65 and older is expected to increase from 20.3% in 2025 to 26% in 2030, the number of elderly households with a lower propensity to consume will continue to rise. As this demographic shift acts as a downward factor, the growth rate of private consumption is expected to decline further.