[The Editors' Verdict] The Gap Between Statistics and Reality

The coronavirus and its variants continue to strike both the world and South Korea. When it first landed domestically in March last year, people couldn't even go outside. Unlike past outbreaks such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS), people still went about their outdoor lives, but COVID-19 was different.

Schools shifted to online classes, and companies moved to remote work. Even when things seemed to improve a little until recently, just as people were starting to get used to it, variants caused chaos. Naturally, the more tests conducted, the more confirmed cases there are. Recently, as coronavirus variants increased, there have been laughable situations where one person gets tested three times a day.

Meanwhile, last year the global and domestic economies were devastated by COVID-19. The global economic growth rate plummeted, and although South Korea's economy performed better than the global average, it still showed negative growth. Now, more than a year since the coronavirus spread, people know how to cope, and the government is rolling out numerous policies related to quarantine. Many forecasts predict high growth this year due to the base effect, government fiscal spending, and exports influenced by other countries' quarantine situations. However, when looking at industries or markets providing services, conditions are said to have worsened, and even with vaccines developed, things seem likely to get tougher. This means economic growth is not being felt by the public, indicating a gap between perceived economic conditions and actual growth rates.

What about inflation? Prices are rising along with growth. Until around the time the coronavirus arrived, deflation was actually a concern, due to last year's base effect and reduced consumption. However, because of last year's low prices, inflation suddenly began this year alongside growth. Grocery prices are even worse. Even with 10,000 won in hand, there is nothing to buy at markets. Yet, statistics representing prices fail to properly reflect this situation. Especially when variables related to real estate prices are included, the data fluctuates wildly.

What about jobs? The government is creating many jobs. However, these jobs are not quality jobs that count as employment, such as short-term part-time work. Particularly, young generations who intend to work in the future are not helped at all by these jobs, which are created using taxpayers' money. Statistics show improvements in employment and unemployment rates. But excluding economically inactive populations such as temporarily laid-off workers, those on leave, job seekers, and short-term fiscal job projects, the actual situation is not good. There is a gap between perceived unemployment and actual unemployment rates.

What about real estate? Nowadays, most people without homes cannot solve the problem with their income, so they don't even look at sale prices. The numbers cannot be trusted and are of no help for research. Apartment prices in Seoul have risen about 200% compared to 2017. Especially until the end of 2019, prices rose about 100%, and recently the trend is upward again. An apartment that cost 500 million won in early 2017 is now around 1 billion won, and currently about 1.5 billion won. However, statistics related to various indices remain in the tens of percent range. Although reality is different, statistics show strange numbers due to various issues.

On the other hand, an odd situation arises where taxes for homeowners continue to increase. Both sellers and buyers accumulate dissatisfaction. There is a huge gap between perceived real estate prices and actual real estate prices.

Professor Kim Sang-bong, Department of Economics, Hansung University