Stagnant Growth and Won Depreciation... Maintained 22nd Place but Gap with Japan and Italy Widens
[Asia Economy Reporter Moon Chaeseok] Last year, South Korea's per capita Gross Domestic Product (GDP) decline rate was the fifth highest among the member countries of the Organisation for Economic Co-operation and Development (OECD).
This was because the nominal GDP growth rate in Korean won last year was just about 1%, and the won-dollar exchange rate rose by nearly 6%, causing the dollar-based GDP to fall by about 5%.
According to the Bank of Korea on the 7th, among the 35 OECD member countries (excluding Lithuania), South Korea ranked 22nd with a per capita nominal GDP of $31,681 last year.
This was about a 5% decrease from $33,340 in 2018, making the decline rate the fifth highest.
It followed Iceland (-8.1%), Norway (-7.7%), Chile (-6.7%), and Sweden (-5.4%).
South Korea's per capita GDP decrease amount was $1,658, ranking sixth after Norway ($6,315), Iceland ($5,895), Sweden ($2,949), Australia ($2,199), and Luxembourg ($2,081).
In terms of amount, the ranking remained 22nd as in 2018.
However, the gap with 20th-ranked Japan ($40,286) and 21st-ranked Italy ($33,146) widened from $5,846 to $8,605 and from $1,159 to $1,465, respectively.
The noticeable decline in South Korea's per capita GDP is due to the nominal GDP growth rate in Korean won last year being 1.1% (from 1,898.2 trillion won to 1,919 trillion won), significantly lower than 3.4% in 2018 (from 1,835.7 trillion won to 1,898.2 trillion won).
Due to the depreciation of the won, the won-dollar exchange rate jumped by 5.9% on average last year, causing South Korea's nominal GDP in US dollars to shrink by 4.6% (from $1.7252 trillion to $1.6463 trillion).
Last year's dollar-based per capita Gross National Income (GNI) ($32,115) also decreased by 4.3% compared to 2018 ($33,564), marking the largest decline in 10 years since the financial crisis in 2009 (-10.4%).
Nominal GNI is the total income earned by all citizens domestically and abroad, including wages, interest, and dividends.
There is great concern that if the COVID-19 crisis causes negative growth this year and the won continues to depreciate (won-dollar exchange rate rises), South Korea's per capita GNI could fall below $30,000 for the first time in three years since 2017.
The Bank of Korea estimated this year's nominal GDP growth rate at -1%. If the exchange rate depreciates by about 5% annually, the per capita GNI could fall below $30,000.
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