According to the Ministry of Economy and Finance, the government forecasts real gross domestic product (GDP) to grow by 0.9% this year and 1.8% next year. This year's growth forecast shrinks to about half of the figure the government released in January (1.8%) due to factors such as the construction sector downturn. It is the deepest recession in five years since the negative growth caused by the COVID-19 pandemic in 2020. The forecast for next year's growth also remains in the 1% range. Containers are stacked at Pyeongtaek Port in Gyeonggi Province. /Courtesy of Yonhap News

Korea's per capita gross domestic product (GDP) is expected to be overtaken by Taiwan's this year for the first time in 22 years.

According to the government on the 14th, Korea's per capita GDP this year is projected at $37,430. That falls short of Taiwan's per capita GDP ($38,066) forecast by the Directorate-General of Budget, Accounting and Statistics.

As recently as 2018, the two countries' per capita GDP differed by about $10,000, but the gap has narrowed quickly since. Last year, Korea posted $35,129 and Taiwan $33,437, but this year Taiwan appears set to overtake Korea for the first time in 22 years.

Taiwan has sustained rapid growth on the back of strong semiconductor exports. In the second quarter this year, Taiwan's real GDP grew 8.01% from a year earlier, the biggest expansion since the second quarter of 2021 (8.28%). Last month, the statistics agency sharply raised its forecast for this year's real GDP growth to 4.45% from 3.10%.

By contrast, Korea's real GDP in the second quarter rose just 0.6% from a year earlier and 0.7% from the previous quarter. The government projected real GDP growth this year and next at 0.9% and 1.8%, respectively, falling short of the potential growth rate of 1.9% under the Organisation for Economic Co-operation and Development (OECD) standard.

Taiwan also looks increasingly likely to reach "$40,000 per capita GDP" ahead of Korea. The statistics agency projects Taiwan's per capita GDP next year will reach $41,019, topping $40,000 for the first time on record.

By contrast, Korea's per capita GDP next year is expected to be around $38,947, showing little progress. As recently as seven years ago, there were forecasts that Korea would "reach $40,000 per capita GDP in 2023," but due to COVID-19, low birthrates and an aging population, and a stall in manufacturing innovation, projections now see the $40,000 mark being delayed to 2027–2029.

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