Government Consumption

Highlights

• Government consumption expenditures form an important component of the Gross Domestic Product. These expenditures are calculated as the sum of government outlays for labor costs and goods and services less revenue from household and business purchases of goods and services from the government.

• Government consumption expenditures in 2008 were nearly equal to those for the previous year, with a reduction over the first nine months as multiple changes of government resulted in delays in making budgeted outlays. However, in the last quarter, expenditures were made more rapidly, increasing by 10.4 percent over the same period of the previous year. According to the Ministry of Finance, government budget expenditures in January of 2009 increased by 20.5 percent over the same period of the previous year.

• KResearch projects that government budget expenditures for 2009 will accelerate significantly, in particular in the second quarter when economic stimulus measures inject cash into public circulation. Government consumption expenditures are projected to increase 6.5-9.5 percent after an increase of 0.4 percent in 2008.