No Further Step
Last year, Korea’s per-capita GNI decreased in six years. It entered the US$20,000 level for the first time in 2006 and has not passed the level in ten years.
Taking into consideration the fact that major developed countries entered the US$30,000 level in four to five years since entering the US$20,000 level, it is concerned that Korea may fall in a trap of failing to become a developed nation due to stagnant growth.
According to the national account of 2015 released by the Bank of Korea on March 25, Korea’s per-capita GNI will edge down 2.6 percent to US$27,430 from US$28,701 in 2014.
Korea’s per-capita GNI rose through US$20,000 for the first time in 2006. The figure fell below US$2,000 to US$18,302 once in 2009. But since 2010, the figure had steadily risen, but dropped last year in six years.
Low growth and low consumer prices also contributed to slashing the per-capita GNI. GNI is nominal GDP divided by estimated population. The higher GNI is, the higher the per-capita GNI will be. In the event that the consumer price maintains a level lower than that of the previous year or record a negative figure, the nominal GDP will decrease. Taking this fact into account, last year’s inflation stood at 0.7 percent, the lowest-ever level and the growth rate fell to the two percent level, both of which impacted the decrease in the per-capita GNI.
Korea’s per-capita GNI has been staying at the US$20,000 level relatively longer vis-a-via that of major developed countries. According to the World Bank, Japan’s per-capita GNI surpassed US$20,000 for the first time in 1988 by reaching US$24,470. In 1992, the figure exceeded US$30,000 in four years since passing US$20,000. Switzerland and Sweden spent two and four years, respectively to do that. It took Germany and Denmark six years, respectively. The U.S. reached the goal after nine years.
The point is that the Korean economy is expected to hardly reach the US$30,000 milestone this year either. An interest rate hike by the US and China’s economic slowdown have been keeping the Korea-US exchange rate above 1,200 won on average and Korea’s economic growth rate is expected to stand at the upper-middle level of two percent. This is why virtually Korea’s per-capita GNI will not be able to enter the US$30,000 unless Korea’s economic growth reaches the upper-middle level of three percent this year.