Economic Emergency... Will Achieving This Year's National Income of $30,000 Become Difficult?

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] There are concerns that South Korea's per capita Gross National Income (GNI) may not reach the $30,000 level this year. Due to the impact of the novel coronavirus disease (COVID-19), if domestic economic damage worsens and the value of the Korean won declines further, the $30,000 threshold could be lost.

According to the Bank of Korea on the 2nd, last year's per capita GNI was $32,115, down 4.3% from $33,564 in 2018. This is the largest decrease since 2009 (-10.4%). Per capita GNI is the income earned by a country's citizens both domestically and abroad divided by the population. South Korea achieved the $30,000 per capita GNI, one of the criteria for advanced countries, in 2017.

South Korea first entered the $30,000 range in 2017 with $31,734 per capita GNI. Reaching a per capita GNI of $30,000 is interpreted as joining the ranks of advanced countries.

However, due to the shock of COVID-19, this year's GDP growth rate is expected to be negative, making the future even darker. The Bank of Korea projected this year's domestic economic growth rate at -0.2%. In this context, if the won continues to weaken, per capita national income could decline further.

Professor Lee In-ho of Seoul National University's Department of Economics said, "If there is negative growth, income naturally decreases, but the key is how much it decreases," adding, "Even if it exceeds $30,000, it will be at a lower level than last year."

Meanwhile, Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, said, "If the nominal GDP growth rate, which reflects inflation and is the perceived growth rate, is -1% this year, and the exchange rate depreciates by about 5%, the per capita GNI in dollar terms could fall below $30,000."