Last year, the per capita Gross National Income (GNI) of South Koreans surpassed Japan and Taiwan once again. Among countries with populations over 50 million, South Korea ranked 6th. However, the achievement of $40,000 is expected to be delayed somewhat due to last year's Gross Domestic Product (GDP) growth rate, GDP deflator, and exchange rate falling short of initial forecasts.
According to the '2024 Q4 and annual national income (provisional)' statistics released by the Bank of Korea on the 5th, last year's per capita GNI recorded $36,624, an increase of 1.2% from the previous year. In terms of won, it rose by 5.7% to 49,955,000 won.
◇ For the second consecutive year, surpassing Japan and Taiwan... 6th among countries with populations over 50 million
GNI is the sum of all wages, interest, dividends, and other income earned by the entire population, both domestically and internationally. It is influenced by economic growth (real GDP), price levels (GDP deflator), and exchange rates. The per capita GNI is calculated by dividing GNI by the total population and is used as an indicator of the average living standards of a country's citizens.
South Korea's per capita GNI first exceeded $30,000 in 2014 ($30,797) and increased to $37,898 in 2021. However, the following year, the won-dollar exchange rate surged, causing it to drop to $35,229. Nevertheless, in 2023, it rebounded to $36,194, and last year recorded $36,624, again approaching the $37,000 mark.
This achievement surpasses major countries like Japan. Last year, Japan's per capita GNI was estimated at about $34,500, while Taiwan's was $35,188. For two consecutive years, the GNI of Japan and Taiwan has fallen short of South Korea's. Among countries with populations over 50 million, South Korea ranks 6th after the United States, Germany, the United Kingdom, France, and Italy.
South Korea's per capita GNI outpacing Japan and Taiwan is attributed to relatively small fluctuations in the exchange rate and high growth rates. According to the Bank of Korea, last year's won-dollar exchange rate decreased by 4.3% compared to the previous year, while the value of the Japanese yen fell by 7.4%, and South Korea's real GDP growth rate (2.0%) significantly surpassed Japan's (0.1%). In Taiwan, the currency depreciation was 3.0% and the growth rate was a favorable 4.3%, but the per capita GNI remained at around $35,000, failing to exceed South Korea's.
◇ Uncertainty in politics and Trump's tariffs... Red light for achieving $40,000 by 2027
However, the situation is expected to change this year. Due to political instability caused by last year's state of emergency and the tariffs imposed by U.S. President Trump, the volatility of the won-dollar exchange rate has increased. In contrast, the yen has shown strength thanks to the possibility of the Bank of Japan (BOJ) raising its policy interest rate. The dollar-yen exchange rate fell from the 157-yen range at the end of last year to the recent 150-yen range.
The Bank of Korea expects the entry of South Korea's per capita GNI into the $40,000 club to be delayed compared to earlier expectations. Kang Chang-gu, head of the National Income Division, noted that 'last year, the International Monetary Fund (IMF) predicted that South Korea would achieve a per capita GNI of $40,000 by 2027,' adding, 'However, considering the increased exchange rate volatility since then, we might need to observe it a bit longer.'
Nonetheless, he stated, 'The nominal GNI growth rate continues to trend upward,' asserting, 'We should be able to achieve $40,000 within a few years.' Last year, the nominal GNI (in won) increased by 5.8% compared to the previous year, as incomes earned by South Koreans abroad rose. The nominal GNI has steadily increased except during the IMF currency crisis period.
Meanwhile, the provisional figure for last year's annual real GDP growth rate was recorded at 2.0%, the same as the preliminary estimate released in January. By expenditure item, the growth expanded from 3.6% in 2023 to 7.0% last year, marking the largest increase. Government consumption (1.3% to 1.8%) and facility investment (1.1% to 1.6%) also saw expanded growth. However, private consumption's growth (1.8% to 1.1%) slowed, and construction investment turned to a decrease (-1.3%).
Last year's fourth-quarter GDP growth rate in South Korea also showed the same 0.1% indicated in the preliminary estimate. The Bank of Korea stated, 'As a result of reflecting some performance data for the final month of the quarter that were not available during the preliminary estimate, exports (+0.5 percentage points), government consumption (+0.2 percentage points), and imports (+0.2 percentage points) were revised upward, while construction investment (-1.3 percentage points) and facility investment (-0.4 percentage points) were revised downward.'