Korea Widens Income Gap with Italy, the 'Lowest in G7'

G7 Nearly Recovers from COVID-19 Shock
Factors Like Inflation and Exchange Rates Also Impact

In 2020, when the COVID-19 pandemic swept across the globe, South Korea's nominal Gross National Income (GNI) per capita narrowly surpassed that of Italy, a member of the Group of Seven (G7). However, due to the economic recovery of established advanced countries and the depreciation of the Korean won, South Korea has fallen behind again since last year.

According to the Bank of Korea's 'Financial Economic Snapshot' service on the 30th, based on the latest World Bank (WB) statistics, South Korea's nominal GNI per capita last year was $35,990 (approximately 48.56 million KRW). Among the G7 countries, Italy, which has the lowest GNI per capita, recorded $37,700, $1,710 higher than South Korea. This means South Korea's income level fell short of the 'G7 threshold.'

Leaders of the G7 countries attending the summit [Image source=Yonhap News]

Previously, in 2020, South Korea's GNI per capita was $33,040, exceeding Italy's $32,430 by $610. At that time, Italy's Gross Domestic Product (GDP) fell by about 9% due to a decline in international tourist demand caused by COVID-19 lockdowns, allowing South Korea to temporarily surpass Italy.

However, as Italy's economy recovered to pre-COVID-19 levels, the ranking was reversed again. Moreover, the gap has widened. In 2021, South Korea's GNI per capita was $1,020 less than Italy's, but last year, the difference increased to $1,710.

The income gap with other G7 countries is also widening. Last year, the GNI per capita gaps between South Korea and each G7 country were as follows: △United States $40,380, △Germany $17,400, △Canada $16,970, △United Kingdom $12,900, △France $9,870, △Japan $6,450, △Italy $1,710. The only country where the gap narrowed was Japan, due to the depreciation of the Japanese yen against the US dollar.

This year, the income gap between South Korea and major countries is likely to widen further. Nominal income is calculated by adding inflation factors to real income. Additionally, since it is based on the US dollar, it is significantly affected by exchange rates and prices. Both factors are disadvantageous for South Korea compared to other advanced countries, and the real growth rate does not differ enough to offset these effects.

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