"South Korea Is Becoming Increasingly Distant"... Japan Shocked by Widening Per Capita GDP Gap

Japan Ranks 24th in OECD for Per Capita GDP, South Korea 21st
Triple Burden of Low Birth Rate, Sluggish Growth, and Weak Yen

Last year, South Korea's per capita Gross Domestic Product (GDP) surpassed Japan's, further widening the gap between the two countries. Japanese media offered a self-deprecating assessment, stating that Japan had fallen behind not only South Korea but also Spain and Slovenia. Analysts attribute this to a combination of the entrenched weak yen phenomenon, the decline in Japanese corporate competitiveness, and the country's low birth rate and aging population.

Last year, South Korea's per capita Gross Domestic Product (GDP) surpassed Japan's, further widening the gap between the two countries. Getty Images

Japan's Per Capita GDP Drops by 4.3%... Falls to 24th Among 38 OECD Countries

According to statistical data released by Japan's Cabinet Office on the 23rd, Japan's per capita GDP in U.S. dollar terms last year was $33,785 (about 5,009,000 yen), a decrease of $1,444 (4.3%) from the previous year. As a result, Japan's ranking among the 38 OECD member countries fell from 22nd to 24th.

South Korea's per capita GDP last year was $36,239 (about 5,373,000 won), an increase of only $565 (1.6%) from the previous year, and its ranking among OECD member countries remained unchanged at 21st.

However, the per capita GDP gap between South Korea and Japan widened from $445 (about 659,000 won) in the previous year to $2,454 (about 3,639,000 won) last year. During the same period, the difference in their rankings also grew from one place to three places.

President Lee Jae-myung held an informal brief meeting with Japanese Prime Minister Sanae Takaichi at the Nasrec Expo Centre in Johannesburg, South Africa, where the Group of Twenty (G20) summit took place on the 23rd of last month (local time). Photo by Yonhap News Agency

Japanese Media: "Falling Behind Not Only South Korea, but Also Spain and Slovenia"

Kyodo News cited "the combination of a low birth rate, an aging population, chronic low growth, and the weak yen" as reasons for the decline in Japan's per capita GDP, reporting that "Japan has fallen behind not only South Korea but also Spain and Slovenia."

In particular, the weak yen has been identified as a direct factor dragging down per capita GDP when calculated in U.S. dollar terms. Although the Bank of Japan (BOJ) raised its benchmark interest rate to 0.75% on the 19th, the market viewed the signal for further tightening as weak. As a result, the yen-dollar exchange rate rose again to the 157-yen range (indicating a depreciation of the yen), and the possibility of the rate returning to the 160-yen range is also being discussed.

An employee is organizing Japanese yen at the Hana Bank Counterfeit Response Center in Jung-gu, Seoul.

First Reversal in 2023... "First Time Since 1980"

2023 marked the first time that Japan's per capita GDP fell behind South Korea's. At that time, Japan's per capita GDP was $33,849, a decrease of 0.8% from the previous year, while South Korea recorded $35,563, surpassing Japan.

Nikkei reported, "The reversal in rankings between South Korea and Japan occurred as South Korea changed its statistical standards," adding, "It is the first time since comparable statistics became available in 1980 that Japan's per capita GDP has fallen below South Korea's." The Bank of Korea previously announced the results of its "2020 base year revision of the national accounts," changing the base year for national accounts statistics from 2015 to 2020. As a result of this revision, it was found that South Korea's per capita income overtook Japan's.