[Anchor]

It is Monday, and we have reporter Han Jiyeon here for "Friendly Economy." Han, it looks like exports have surged tremendously thanks to semiconductors.

[Reporter]

We are projected to surpass USD 1 trillion in annual exports starting this month.

This will make us the fourth country in the world to do so, following the United States, China, and Germany.

Let us look at the performance figures for October, which were released yesterday (November 1).

Monthly exports were the second-highest on record.

When was the highest? Right in the previous month, September.

It took us 30 years to go from USD 100 billion to USD 700 billion in exports.

This year, we rapidly crossed USD 800 billion and USD 900 billion in just ten months.

Now, only USD 70 billion remains. Given that we have been selling over USD 100 billion a month lately, breaking the milestone this month is practically certain.

Leading this record is, of course, semiconductors.

Last month, semiconductor exports surged to 3.6 times what they were a year ago, increasing their share from about a quarter to nearly half.

As global big tech companies continue investments to secure leadership in artificial intelligence, they are buying large quantities of semiconductors at high prices.

Following the same trend, servers and server SSDs—meaning storage devices—also sold well, causing computer exports to skyrocket nearly sixfold.

Petroleum products tell a slightly different story.

While export value surged by 80%, the actual volume sold decreased.

This was thanks to selling at high prices as oil costs rose amid the prolonged conflict in the Middle East.

It is not just a select few items doing well.

Out of 20 major categories, 18 saw increases, while automobiles, cosmetics, and agricultural and fishery foods hit all-time highs for the month of October.

[Anchor]

However, it seems not many people feel that the economy has improved as much as exports have grown.

[Reporter]

That is correct. Domestic consumption is still lukewarm.

Retail sales in the third quarter dropped 0.5% compared to a year ago.

This marks a shift back to negative growth for the first time in five quarters.

Many of you probably check apps rather than supermarkets when going grocery shopping, right?

Non-store sales, such as online shopping, rose 2.1%.

Large discount stores, having lost customers to online platforms and facing store closures due to the Homeplus situation, are failing to bounce back.

Sales have fallen for two and a half consecutive years, setting a record for the longest decline.

Restaurants and accommodations also experienced their steepest setback in a year and a half.

Of course, there are reasons why overall retail sales—meaning the volume of goods we bought—decreased.

There is a base effect from last year when sales were boosted by consumption coupons.

Fewer cars were sold due to overlapping automobile strikes and vacations.

Even when excluding automobiles, growth was limited to just 0.9%.

This is less than half of the 2% range seen in the first half of the year.

Looking at what people bought, big-ticket items like cars and home appliances, as well as clothing, were purchased less.

Only so-called small consumption items that are used up quickly, such as food and cosmetics, increased.

That does not mean everything is frozen.

There are sectors that are smiling.

Driven by a surge in stock trading, the finance and insurance industry saw its largest jump in about three years.

Department store sales grew for the fifth consecutive quarter, and duty-free shops frequented by tourists saw their largest increase in about two years.

[Anchor]

Lastly, let us talk about middle-class income. It is probably best to keep in mind that these are statistics from 2024.

[Reporter]

That is correct. Nearly 4 out of 10 middle-class households saw their earnings drop.

This is the highest proportion since the COVID-19 pandemic.

Here, the middle class refers to the exact middle 20%—commonly called the backbone tier—when ranked by earnings from wages or business.

The proportion of people in this backbone tier whose earnings fell compared to a year ago dropped for three straight years after the pandemic before shooting back up.

Among the five income brackets, the middle class saw the largest increase in this proportion.

For one out of every three people whose earnings dropped, their income was cut in half or worse.

Of course, 57% still reported increased earnings, making up the larger share.

In fact, this is data from the year before last.

So you might think this year, with growth rates projected to reach the 3% range, would be a bit better.

However, the National Data Office explained that benefits such as semiconductor performance bonuses tend to be concentrated among the top 40% of earners, who are mostly in their 30s and 40s, making it difficult for the impact to immediately reach the middle class.

The Bank of Korea also analyzed in a report last July that not only rising wages but also income earned from assets like stocks is heavily concentrated among those who earn more and hold more.

These individuals have a relatively low marginal propensity to consume, meaning the share of additional income they actually spend is small.

Just as a tight-budget household will spend most of an extra one million won if received, a well-off household tends to save a considerable portion.

As a result, the spillover effect of export warmth onto consumption can be weakened.

Still, the Bank of Korea projected that the domestic consumption effect of the current export boom will be larger than in the past.

If wage growth spreads to other industries, visible improvements in consumption could appear around next year.