Korea's gross national income (GNI) per capita is likely to top $40,000 for the first time this year, the Bank of Korea projected. The analysis said the goal is achievable if strong semiconductor exports continue through the end of the year and the won-dollar exchange rate does not spike from current levels.
If this outlook materializes, Korea could join the "$40,000 club (population 50 million or more)" for the first time in 12 years since surpassing $30,000 in 2014. The only $40,000 club countries are the United States, Germany, the United Kingdom, France and Italy.
Kim Hwa-yong, head of national income statistics at the Bank of Korea (BOK), said at a briefing that "if there are no unexpected shocks during the remainder of the year, the annual nominal GNI growth rate stays at the current level, and exchange-rate stability continues, the per-capita GNI in U.S. dollar terms is now very likely to exceed $40,000."
Last year, GNI per capita was 52.57 million won, up 4.6% from a year earlier. But because the exchange rate rose (the won weakened), it came to $36,963 in dollar terms, up just 0.3%. Per-capita GNI converts national income calculated in won into dollars using the annual average exchange rate. The higher the won-dollar exchange rate, the lower the income in dollar terms.
The Bank of Korea estimated that if this year's average exchange rate is 1,478 won or lower, per-capita GNI will exceed $40,000. Through the 7th, the average exchange rate was 1,471 won. That means the $40,000 mark is attainable if the exchange rate does not surge during the remaining period. The rate fell from an average of 1,527.3 won in June to 1,497.4 won in July and 1,406.3 won in August. Recently, it has been in the 1,340-won range.
According to the Bank of Korea's released preliminary national income data for the second quarter, nominal GNI rose 8.8% from the previous quarter and 26.4% from a year earlier. Nominal gross domestic product (GDP) increased 9.2% from the previous quarter and 26.4% from a year earlier. The year-over-year growth rate of nominal GDP is the highest in 47 years since the third quarter of 1979 (27.7%).
Real GDP, excluding price effects, increased 0.6% from the previous quarter. Real GNI, which reflects households' purchasing power, rose 3.1% over the same period, more than five times real GDP. As prices for semiconductor exports rose, exporting the same volume made it possible to buy more imports.