When Will Per Capita Income Reach $40,000? BOK Says It Could Be Next Year If the Exchange Rate Has No Impact

[The Financial News] South Korea’s per capita Gross National Income (GNI) once again failed to break out of the $36,000 range last year. The Bank of Korea (BOK) judged that movements in the US Dollar–South Korean Won exchange rate will be crucial for lifting per capita GNI to $40,000. If the rate does not move significantly, that milestone is projected to be reached next year.
According to the BOK on the 10th, nominal per capita GNI came to $36,855 last year, up just 0.3% from $36,745 a year earlier. In won terms, it rose 4.6% to 52.416 million won, but the increase was effectively offset as the US Dollar–South Korean Won exchange rate climbed.
Kim Hwayong, head of the BOK’s Economic Statistics Department 2 National Income Division, said, "The exchange rate rose 4.3% last year due to supply-and-demand factors rather than our economic fundamentals, and this acted as a drag on per capita GNI."
Per capita GNI first surpassed $30,000 in 2014 at $30,798, but has remained stuck in the $30,000 range for 11 consecutive years through last year. When the exchange rate rises, the amount measured in won may increase, but the dollar-denominated figure loses value by a similar margin. In 2022, for example, per capita GNI rose 4.9% in won terms, yet fell 7.0% when measured in dollars.
As of 2024, South Korea ranked sixth among countries with populations of at least 50 million. It trailed the United States of America (U.S.), Germany, the United Kingdom of Great Britain and Northern Ireland (United Kingdom), France, and Italy. For last year, some countries have not yet released statistics, so a full global ranking is not available, but South Korea appears to have fallen behind Taiwan and Japan.
Kim noted, "Taiwan’s per capita GNI last year was $40,585. Its IT manufacturing industry accounts for a share three times larger than ours, and it benefited greatly from the semiconductor boom." He added, "Japan’s figure is estimated to be in the low $38,000 range, which reflects an expansion in its measured economic size following a revision of the base year last December."
Kim went on to say, "If we assume the exchange rate has zero impact going forward and per capita GNI grows 4.3% this year and next, the figure would exceed $40,000 in 2027," emphasizing that "the impact of the exchange rate at that time will be extremely important."
In particular, if the exchange rate rises, the value of per capita GNI expressed in dollars will inevitably be reduced.
Last year, nominal annual Gross Domestic Product (GDP) increased 4.2% year-on-year to 2,663.3 trillion won. However, in dollar terms it slipped 0.1% to $1.8727 trillion. The GDP deflator rose 3.1%, slowing from a 4.1% increase the previous year.
taeil0808@fnnews.com Kim Tae-il Reporter