"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. This outcome is analyzed as the result of several factors: the entrenched weakness of the Japanese yen, the decline in competitiveness of Japanese companies, and the combined effects of low birth rates and an 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 Down 4.3%... Falls to 24th Among 38 OECD Countries

According to statistics released by the Japanese Cabinet Office on the 23rd, Japan's per capita GDP last year, calculated in US dollars, was $33,785 (about 5.009 million yen), a decrease of $1,444 (4.3%) compared to the previous year. As a result, Japan's ranking among the 38 OECD member countries dropped from 22nd to 24th place.

South Korea's per capita GDP last year was $36,239 (about 5.373 million won), which was 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 million won) last year. During the same period, the difference in rankings also increased 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: "Japan Falls Behind Not Only South Korea, But Also Spain and Slovenia"

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

In particular, the weak yen is cited as a direct factor dragging down per capita GDP when calculated in US dollars. Even though the Bank of Japan (BOJ) raised its policy interest rate to 0.75% on the 19th, the market viewed further tightening signals as weak. As a result, the yen-dollar exchange rate rose again to the 157-yen range (indicating a weaker yen), and there is even talk of a possible return to the 160-yen range.

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 0.8% decrease from the previous year, while South Korea recorded $35,563, surpassing Japan.

Nikkei reported, "With the change in South Korea's statistical standards, the rankings of South Korea and Japan were reversed," and added, "This is the first time since 1980, when comparable statistics became available, that Japan's per capita GDP has fallen below South Korea's." The Bank of Korea announced the results of the "2020 Base Year National Accounts First Revision," which changed the base year for national accounts statistics from 2015 to 2020. According to this revision, it was found that South Korea's per capita income overtook Japan's.