IMF "South Korea's Purchasing Power Adjusted Per Capita GDP Declines" ... First Time in 22 Years Since the Foreign Exchange Crisis

Asia Economy DB=Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] Due to the impact of the novel coronavirus infection (COVID-19), it is forecasted that South Korea's purchasing power parity (PPP)-based per capita gross domestic product (GDP) will decrease for the first time since the foreign exchange crisis.

According to the International Monetary Fund (IMF)'s April World Economic Outlook data released on the 3rd, South Korea's real per capita GDP based on PPP is expected to decline by 1.3% compared to last year. If the IMF's forecast holds true, it will mark the first decrease in 22 years since 1998 (-5.8%), when the country experienced the foreign exchange crisis.

Real per capita GDP based on PPP is an indicator that reflects the country's price level and shows whether the actual purchasing power of its citizens has improved or worsened.

South Korea did not experience a decline in real per capita GDP based on PPP during the global financial crisis in 2008 (2.2%) and 2009 (0.3%), nor during the European debt crisis in 2012 (1.9%). Before the foreign exchange crisis, the only negative growth recorded was in 1980 (-3.2%) during the oil shock.

The reason for the forecast that the living standards of South Korean citizens will worsen this year is that the COVID-19 pandemic has caused the global economy to enter a recession phase.

The IMF expects that not only South Korea but most countries worldwide, including the United States, Japan, and Europe, will see a decline in real per capita GDP based on PPP.

The United States is projected to decrease by 6.4%, and Japan (-4.8%), Germany (-7.0%), France (-7.4%), Italy (-8.9%), and the United Kingdom (-7.0%) are also expected to decline. Among major economies, China (0.9%) is the only country expected to avoid negative growth.

The IMF predicted that in 2009, 62.3% of countries worldwide experienced a decrease in real per capita GDP based on PPP, but this year, the proportion is expected to surge to 90.3%.

Meanwhile, the IMF forecasts that the world's real per capita GDP based on PPP will decrease by 4.2% this year but increase by 4.6% next year. South Korea is expected to grow by 3.3% in 2021.

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