South Korea's Per Capita National Income at $32,000... Expected to Decrease for the First Time in 4 Years

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] South Korea's per capita Gross National Income (GNI) is estimated to have decreased last year. This result came as economic growth slowed and the Korean won weakened (exchange rate rose) simultaneously.

According to the Bank of Korea on the 24th, last year's per capita GNI is estimated to be around $32,000, down 4-5% from $33,434 in 2018. If the estimate holds, it would be the first decline in four years since 2015. In 2018, GNI surpassed $31,000, marking the beginning of the "30,000-dollar per capita income era," but the GNI has now turned to a downward trend again.

Per capita GNI is an indicator showing the living standards of the people. It is calculated by reflecting the nominal gross national income with the estimated population by Statistics Korea and the won-dollar exchange rate.

Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, said, "We estimate the GNI decline rate due to the exchange rate increase to be about 4-5%," adding, "Accurate statistics will be announced in March when nominal GDP is released." He further explained, "As the exchange rate rose, the value of our currency in dollar terms decreased, which appears to have caused the GNI to decline."

However, even if the per capita national income decreases compared to last year, it is expected to comfortably remain above $30,000. Earlier, the Bank of Korea predicted that if the Korean economy continues to grow at the potential growth rate level, it could achieve a per capita national income of $40,000 within 10 years.

Meanwhile, according to the Bank of Korea, last year's real Gross Domestic Income (GDI) decreased by 0.4% compared to the previous year. A negative GDI growth rate means that the real purchasing power of economic agents such as households and companies has declined. This is the fourth time GDI growth has been negative, following 1956, 1980, and 1998.

The government cites the main reason for the GDI turning negative as the deterioration of terms of trade, including the decline in semiconductor prices. GDI is an indicator representing the real purchasing power of final products produced domestically, calculated by adding the real trade gains or losses due to changes in terms of trade to the real Gross Domestic Product (GDP).

Last year, semiconductor prices fell sharply, with the price of DRAM, a key product, dropping 60.9% annually, and NAND prices also falling 9.1% last year following a 15.4% decline in 2018.

This content was produced with the assistance of AI translation services.