Korea's per capita gross national income (GNI) has surpassed that of Japan and Taiwan. The per capita income for 2023 is projected to rank 6th among countries with a population of more than 50 million.
However, due to sluggish first-quarter gross domestic product (GDP) and uncertainties surrounding the United States' reciprocal tariff policy, it has become challenging to predict the timing for achieving $40,000. The Bank of Korea recently noted that there are signs of improvement in domestic demand, but concerns about a slowdown in exports remain significant.
◇ Surpassing $30,000 in 2014… 6th among major countries after the U.S. and Germany
According to the '2023 National Accounts (Final)' and '2024 National Accounts (Preliminary)' released by the Bank of Korea on the 5th, last year's per capita GNI was tallied at $36,745, a 1.5% increase from the previous year. In Korean won, it was recorded as 50.12 million won, an increase of 6.1%.
GNI is the total income earned by all citizens from wages, interest, dividends, and other sources both domestically and internationally. It is influenced by factors such as economic growth rate (real GDP), prices (GDP deflator), and exchange rates. Per capita GNI is calculated by dividing GNI by the total population. It serves as an indicator of the average standard of living of a country's citizens.
Korea's per capita GNI first surpassed $30,000 in 2014 ($30,797), increasing to $37,898 in 2021, but dropped to $35,229 the following year due to a surge in the won-dollar exchange rate. However, it rebounded to $36,195 in 2023, and last year it recorded $36,745, marking two consecutive years of increase.
It has surpassed both Japan and Taiwan among major countries. Last year, Japan's per capita GNI was $34,533, and Taiwan's was $35,200. Thus, Korea has exceeded Japan and Taiwan for two consecutive years. In 2023, based on per capita GNI ($36,195), Korea ranks 6th among countries with a population of more than 50 million, following the U.S., Germany, the U.K., France, and Italy.
Korea's per capita GNI surpassing Japan and Taiwan is attributed to relatively small exchange rate fluctuations and high growth rates. According to the Bank of Korea, last year's won-dollar exchange rate depreciated by 4.3% compared to the previous year, while the Japanese yen fell by 7.4%, and Korea's real GDP growth rate (2.0%) outpaced Japan's (0.1%). Taiwan experienced a currency value decline of 3.0% and a growth rate of 4.8%, which were good results but did not surpass Korea.
◇ Entry into $40,000 likely to be delayed… IMF says Korea's per capita GDP achievement will be postponed
However, it remains uncertain whether Korea can continue to surpass Japan and Taiwan in the future. Korea's growth is expected to fall behind that of Japan and Taiwan. The International Monetary Fund (IMF) projected Korea's growth rate at 1.0% in its 'World Economic Outlook' released on April 22, while Taiwan's is anticipated at 2.9% and Japan's at 1.1%. Notably, the IMF forecasts that Taiwan will surpass both Korea and Japan in per capita GDP next year. This is expected to also affect GNI, which is closely related to GDP.
The timing for Korea's per capita income entry into $40,000 may also be delayed. The IMF previously estimated that Korea would achieve per capita GDP of $40,000 by 2027, but in its report in April, this was pushed back to 2029. This is due to expectations that Korea's real GDP growth rate will stagnate around 1% for several years. The IMF projected that Korea would grow by 1% this year, followed by 1.4% next year, and then 2.1% in 2027, 2.1% in 2028, and 1.9% in 2029, maintaining around 1-2%.
The Bank of Korea believes reviving economic vitality to raise the GDP growth rate is an urgent priority. Director General Kang Chang-gu said, "Per capita GNI fell to around $37,000 in 2021 before starting to rise again," adding, "There is a possibility that we may temporarily achieve $40,000 but then fall again, so we need to consider ways to revitalize the economy and improve the fundamental potential growth rate."
According to the preliminary report on first-quarter national income released by the Bank of Korea that day, Korea's real GDP in the first quarter of this year fell by 0.2% compared to the previous quarter, marking a return to negative territory for the first time in three quarters. Construction investment decreased by 3.1%, while private consumption (-0.1%), exports (-0.6%), and facility investment (-0.4%) also fell significantly, leading the downward trend. This was influenced by domestic political instability and the effects of the U.S. reciprocal tariff imposition, increasing the downward pressure on the economy.
However, the economy is expected to recover in the second quarter. Director General Kang noted, "Looking at the trends in April and May, there are signs that consumption and retail production are improving compared to the first quarter, and indicators reflecting economic trends have turned upward since January," adding, "While there remains considerable uncertainty regarding the developments of tariff policies affecting exports, there are signs of improvement in domestic demand.