Korea's gross domestic product (GDP) converted into U.S. dollars is expected to contract this year. The won-dollar exchange rate has surged.
On the 30th, according to the International Monetary Fund (IMF), the IMF recently estimated in its annual consultation report that Korea's nominal GDP in dollar terms this year will be $1.8586 trillion. That is down $16.8 billion (0.9%) from last year's $1.8754 trillion. Compared with 2023's $1.8448 trillion, it rose $13.8 billion (0.7%) over two years, effectively flat.
In won terms, the IMF expects nominal GDP to increase 2.1% from 2,557 trillion won last year to 2,611 trillion won this year. The figure reflects inflation on top of the real growth forecast (0.9%). The rise in the won-dollar exchange rate appears to have outweighed the GDP increase, reducing the amount when converted into dollars.
Based on weekly closing prices, the average exchange rate for January–November this year was 1,418 won per dollar, up 54 won (4%) from last year's annual average of 1,364 won. With the rate recently surging to levels threatening 1,500 won, the full-year average could climb further once December figures are included.
Amid assessments that Korea has entered a phase of structurally low growth, the exchange rate is expected to remain a key variable determining the size of dollar-denominated GDP. Depending on currency moves, not only the threshold of "$2 trillion GDP" but also the achievement of per-capita GDP of $40,000—expected as early as the year after next—could be delayed.