Taiwan's Per Capita GDP Set to Overtake South Korea for First Time in 22 Years, Fueled by Semiconductor Boom

Slight Lead Last Year Overtaken by Taiwan's Rapid Growth
$40,000 Per Capita GDP Now Expected Only by 2027

South Korea's per capita Gross Domestic Product (GDP) is expected to be surpassed by Taiwan this year, marking a reversal for the first time in 22 years since 2003.

According to a report by Yonhap News on September 14, citing data from the South Korean government and Taiwan's Directorate-General of Budget, Accounting and Statistics, South Korea's per capita GDP is projected to reach $37,430 this year, while Taiwan's is expected to reach $38,066.

This is a simple comparison based on the nominal GDP growth rate forecast (3.2%) presented by the South Korean government last month and the latest projections from Taiwan's statistics agency.

Last year, South Korea's per capita GDP was $35,129, slightly ahead of Taiwan's $33,437, but the gap has now reversed due to Taiwan's rapid growth.

Street scene in Taipei, the capital of Taiwan. Pixabay

Driven by a boom in the semiconductor sector, Taiwan's real GDP in the second quarter of this year increased by 8.01% compared to the same period last year, and its growth forecast was raised from 3.10% to 4.45%. Growth of 2.81% is also expected next year. In contrast, South Korea's growth rate during the same period was only 0.6%, with government forecasts of 0.9% for this year and 1.8% for next year, both falling short of the potential growth rate of 1.9%.

If these projections materialize, South Korea will allow a reversal for the first time in 22 years, after having overtaken Taiwan in 2003 with a per capita GDP of $15,211 compared to Taiwan's $14,041.

The symbolic milestone of reaching a per capita GDP of $40,000 is also expected to be delayed. South Korea is projected to reach only $38,947 next year, while Taiwan is expected to hit $41,019. If the Korean won continues to weaken, the gap could widen further.

The National Assembly Budget Office had forecast in 2018 that South Korea would surpass $40,000 in per capita GDP by 2023, but this prediction missed the mark. The government now expects this milestone to be achievable only by 2027 according to its latest plans.

Experts point to the deepening low birthrate and aging population, as well as delays in industrial transformation, as structural problems facing South Korea. Kim Kwangseok, head of economic research at the Korea Economic and Industrial Research Institute, stated, "South Korea has failed to restructure into high value-added industries, resulting in stagnant growth. It is urgent to overhaul industrial strategies to narrow the gap with Taiwan."