Japan Economic Research Center: "South Korea's Nominal GDP Per Capita to Surpass Japan's by 2027"

Delayed Digitalization Slows Labor Productivity Growth Rate

[Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] The Japan Center for Economic Research, a Japanese think tank, predicted that South Korea's nominal GDP per capita will surpass Japan's by 2027, according to a report by the Nihon Keizai Shimbun on the 16th. The Japan Center for Economic Research also forecasted that Taiwan's nominal GDP per capita will exceed Japan's by 2028.

On the same day, the Japan Center for Economic Research released an economic growth outlook report for 18 countries and regions in the Asia-Pacific region through 2035.

In the report, the Japan Center for Economic Research warned that Japan's lagging digitalization leads to a slowdown in labor productivity growth, which could eventually cause the Japanese economy to be overtaken not only by South Korea but also by Taiwan.

The Japan Center for Economic Research explained that digitalization in administrative tasks significantly impacts the increase in labor productivity.

According to the International Monetary Fund (IMF) and the United Nations, as of last year, Japan's nominal GDP per capita was $39,890 (approximately 47.18 million KRW), which is 25% higher than South Korea's ($31,954) and 42% higher than Taiwan's ($28,054).

However, the Japan Center for Economic Research estimated that by 2025, South Korea's nominal GDP per capita will grow at an annual rate of 6.0%, Taiwan's at 8.4%, while Japan's growth rate will remain at 2.0%. Consequently, it diagnosed that within five years, South Korea and Taiwan will consecutively surpass Japan's nominal GDP per capita.

The Japan Center for Economic Research pointed out that South Korea and Taiwan have faster administrative processing speeds due to digitalization, whereas Japan's digital transformation is delayed. The Nihon Keizai Shimbun explained that South Korea introduced the resident registration number system in the 1960s, enabling over 1,300 application processes through the government portal site using only the resident number, and even internet bank account openings are conducted via the resident number. In contrast, the Ministry of Internal Affairs and Communications in Japan conducted a survey this year revealing that 25% of Japanese companies reported that documents such as contracts with business partners are not digitized at all.

The Japan Center for Economic Research warned that if Japan's digital transformation does not proceed properly, the Japanese economy could face severe negative growth in the 2030s.

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