"Falling Behind": South Korea Overtaken by Taiwan in Per Capita GDP for First Time in 22 Years

South Korea Stuck in the $30,000 Range, Taiwan Set to Enter the $40,000 Mark
South Korea's Per Capita GDP Declines Amid Low Growth and Soaring Exchange Rate

While there is analysis indicating that South Korea's per capita gross domestic product (GDP) declined last year for the first time in three years, it is also expected that Taiwan will surpass South Korea for the first time in 22 years.

While analysis suggests that South Korea's per capita GDP decreased last year for the first time in three years, there are even projections that Taiwan will overtake South Korea for the first time in 22 years.

According to the Ministry of Economy and Finance, the Bank of Korea, and the National Data Office on January 11, South Korea's per capita GDP last year is estimated at 36,107 dollars, down 0.3% from the previous year's 36,223 dollars. This marks the first decrease in per capita GDP in three years, since 2022, immediately after the pandemic.

Last year, South Korea's nominal GDP in dollar terms also declined by 0.5% from the previous year to 1.8662 trillion dollars, marking the first decrease in three years since 2022. However, if the economy grows as projected by the government this year, per capita GDP could rise back above the 37,000-dollar mark for the first time in five years. Since entering the 30,000-dollar era in 2014, South Korea has not been able to surpass the 40,000-dollar threshold for 12 consecutive years.

In contrast, Taiwan's per capita GDP last year is estimated at 38,748 dollars. In its October 2023 outlook, the International Monetary Fund (IMF) projected that South Korea's per capita GDP ranking would drop three places from 34th in the world in 2024 to 37th in 2025. Meanwhile, Taiwan is expected to rise from 38th to 35th, overtaking South Korea. As a result, South Korea was overtaken by Taiwan in per capita GDP for the first time in 22 years last year.

Taiwan surpassed the 30,000-dollar mark in 2021 and is projected to enter the 40,000-dollar range (40,921 dollars) this year, just five years later. The IMF forecasts that South Korea will reach the 40,000-dollar mark for the first time in 2028.

The reasons behind South Korea's per capita GDP remaining in the 30,000-dollar range are attributed to low growth and a high exchange rate. Last year's economic growth rate was 1.0%, the lowest in five years since 2020 (-0.7%). In addition, last year's average won-dollar exchange rate was 1,422.16 won, exceeding 1,400 for the first time ever. The depreciation of the won had a negative impact on calculating GDP in dollar terms.

Taiwan is experiencing the opposite situation. Thanks to strong semiconductor exports, Taiwan's real GDP growth forecast for last year was revised upward by nearly 3 percentage points, from 4.45% to 7.37%. Taiwan's leading company, TSMC, is the world's largest semiconductor foundry, supplying companies such as Nvidia and playing a key role in the global semiconductor supply chain. In addition, the Taiwan dollar has remained strong compared to the Korean won.

Meanwhile, the IMF projected that Japan's per capita GDP last year would be 34,713 dollars, placing it 40th in the world, below both South Korea and Taiwan.