"Yoon Government, Negative National Income" Examining Im Jong-seok's Remarks [News Explanation]

①Increase or Decrease in Per Capita Gross National Income
Im Jong-seok: "Moon Government Raised It, Yoon Government Let It Fall"
Yoon Hee-sook: "Statistics Not Out This Year... Exchange Rate Must Also Be Considered"
Upon Examination, Yoon Hee-sook's Statement Is 'Fact'

In Seoul Jung-gu and Seongdong-gap, former Chief Presidential Secretary Lim Jong-seok and former People Power Party lawmaker Yoon Hee-sook clashed over the issue of national income. Former Chief Secretary Lim stated, "Since the Yoon Seok-yeol administration took office, South Korea's economy is collapsing," adding, "Per capita national income has turned negative for the first time since the IMF crisis. The Moon Jae-in administration started at the $28,000 range and transferred power at the $35,000 range, but last year it regressed to the $32,000 range." Is this true?

Per capita Gross National Income (GNI) is the total income earned by nationals domestically and abroad in a year divided by the population, serving as an indicator of the standard of living. In response to former Chief Secretary Lim blaming the economic collapse on the Yoon Seok-yeol government, former lawmaker Yoon countered, "He said that per capita national income decreased for the first time since the IMF crisis last year, which is strange. The numbers for last year have not even been released yet. It is expected to have increased more," she argued.

There is some ambiguity in accepting former lawmaker Yoon's claim as 100% true. As she said, the statistics for last year's per capita national income are scheduled to be released in early March, but recently the Bank of Korea announced estimates by considering various variables such as ▲real Gross Domestic Product (GDP) growth rate ▲GDP deflator (comprehensive price index) ▲exchange rate ▲population, so former Chief Secretary Lim's remarks on last year's economic performance are not problematic in themselves.

However, former Chief Secretary Lim's statement that "per capita national income decreased" is not true. The Bank of Korea estimated the 2023 per capita GNI to be in the mid-$33,000 range, seeing an increase of several hundred dollars compared to last year ($32,886).

Then why did former Chief Secretary Lim claim that per capita national income decreased? The exact reason is unknown, but it appears he mistakenly referred to the 2022 data. The 2022 per capita GNI was $32,886, a significant drop from 2021 ($35,523). Therefore, former Chief Secretary Lim's statement that "last year regressed to the $32,000 range" may be referring to the 2022 situation. However, it is true that per capita GNI increased during the Moon Jae-in administration as he said. In 2017, when the Moon administration began, per capita GNI was $31,734, but it once rose to the $35,000 range, and in 2022, when the administration ended, it recorded $32,886.

There is a part former Chief Secretary Lim missed when talking about the economic collapse under the Yoon administration. That is the won-dollar exchange rate. Following the point made by former lawmaker Yoon, known as an economic expert in the ruling party, makes it easier to understand. Former lawmaker Yoon pointed out, "From 2021 to 2022, per capita national income increased in won terms but decreased in dollar terms," adding, "This is due to exchange rate changes." She said that due to exchange rates, countries like Japan, Germany, France, and Sweden also saw decreases in per capita national income. Former lawmaker Yoon argued, "Saying the economy failed just because dollar income decreased due to exchange rates is utterly ignorant."

Per capita GNI is published in both US dollar and Korean won terms. Since the value of the won changes with exchange rate fluctuations, the dollar-based indicator should be used for international comparisons. From 2021 to 2022, per capita GNI rose significantly from 40.65 million won to 42.49 million won but fell from $35,523 to $32,886 in dollar terms. The won-dollar exchange rate rose by an average of 12.9% in 2022, causing the won's value to drop, which led to the decrease in per capita GNI. The Bank of Korea also explained in its '2022 Q4 and Annual National Income (Preliminary)' report released in March last year that the cause of the decrease in per capita GNI in dollar terms was the 'exchange rate.'