"South Korea's GDP to Be Overtaken by Taiwan Next Year"...IMF's Negative Outlook

Korea’s $40,000 GDP Milestone Delayed by Two Years
Growth Rate Downgraded This Year... Korea Sees Sharpest Cut
IMF: "Political Situation Changes Also Taken Into Account"

The International Monetary Fund (IMF) has projected that South Korea's per capita Gross Domestic Product (GDP) will be surpassed by Taiwan starting next year. The IMF also stated that South Korea will not be able to reach the $40,000 mark in per capita GDP until 2029, which is two years later than previously forecast.

According to the Bank of Korea on April 28, the IMF, in its 'World Economic Outlook,' has revised South Korea's per capita GDP for this year downward to $34,642. This figure is lower than that of 2022 ($34,822). For next year, South Korea's per capita GDP is projected at $35,880, which is $3,441 lower than the October 2024 forecast ($39,321). This represents an 8.8% drop in just half a year.

The International Monetary Fund (IMF) has projected that South Korea's per capita Gross Domestic Product (GDP) will be surpassed by Taiwan starting next year. Yonhap News Agency

Of particular note is the analysis that Taiwan will overtake South Korea next year. Taiwan's per capita GDP is expected to increase from $34,426 this year to $36,319 next year, which would allow it to surpass South Korea in 2025. The domestic outlook remains bleak even in the medium to long term. The IMF forecasts that South Korea's per capita GDP will grow moderately to $37,367 in 2027 and $38,850 in 2028. In the same period, Taiwan's per capita GDP is projected to reach $38,076 in 2027 and $39,452 in 2028. The IMF believes South Korea will not be able to overtake Taiwan again until 2030.

These projections are linked to the real economic growth rate forecasts for each country. The IMF expects South Korea's real GDP growth rate to recover to 1.4% next year and 2.1% in 2027, but then stagnate at 2.1% in 2028 and 1.9% in 2029. In contrast, Taiwan is expected to maintain growth rates in the 2% range, with 2.5% next year, 2.4% in 2027, 2.3% in 2028, and 2.2% in 2029, even as the rates gradually decline.

Initially, as of October 2024, the IMF had projected that South Korea’s per capita GDP would reach $41,031 in 2027, surpassing the $40,000 threshold. However, the forecast was revised downward due to signs of entrenched low growth, the impact of a strong dollar, and the global trade war under President Trump.

In particular, the IMF recently revised its global economic growth forecast for this year from 3.3% to 2.8%. For South Korea, the downward revision was the largest among major economies, with the growth rate cut in half from 2.0% to 1.0%.

Additionally, sluggish consumption and reduced investment due to domestic political turmoil are further weighing on the South Korean economy. Rahul Anand, head of the IMF mission to South Korea, explained on April 23 (local time) that the downward revision to South Korea’s growth forecast took into account not only the impact of tariff measures but also changes in the domestic political situation since late last year.

In fact, in the first quarter, South Korea's real GDP growth rate fell by 0.2% compared to the previous quarter, confirming concerns of negative growth. Compared to the same period last year, GDP also decreased by 0.1%. Since the 1.3% growth in the first quarter of last year, South Korea has recorded 'zero growth' for four consecutive quarters.