Real GNI per capita $32,661
KRW 42.2 million won… Even with a 4.3% increase
The exchange rate rose by 12.9% and decreased by $4,207.
Deterioration in real purchasing power, concerns over economic contraction
“Growth and inflation of 2% for 2-3 years
We can reach $40,000 soon.”
Despite the government’s goal of ‘national income of $40,000’, Korea’s per capita gross national income (GNI) decreased by nearly 8% last year. On the surface, it is the influence of ‘King Dollar’, but as Taiwan, the same Asian country, catches up following 20 years, the sense of crisis is growing. Amid bad news such as high prices, high exchange rates, high interest rates, and trade deficits, even the people’s real purchasing power is deteriorating, raising alarms that private consumption will contract and suppress economic growth.
According to the “2022 Q4 and Annual National Income” (provisional) statistics released by the Bank of Korea on the 7th, the real GNI per capita last year was $32,661, down 7.7% from 2021 ($35,373). Per capita national income is the total income earned domestically and abroad divided by the number of people in a year, and is an indicator of the purchasing power and standard of living of Koreans.
The Bank of Korea analyzed that the drop in per capita GNI was due to the strong dollar, which broke through to the 1,400 won level in the second half of last year. Choi Jeong-tae, head of the National Accounts Department at the Bank of Korea, said, “Last year, the won-dollar exchange rate rose an unprecedented 12.9 percent, resulting in a decrease in per capita GNI in dollar terms.” When the actual GNI change was analyzed by factor, economic growth increased by $896 and inflation increased by $437, but the rise in the won-dollar exchange rate pulled down by $4,207. Per capita GNI converted in won was 42.2 million won, up 4.3 percent from a year earlier.
The government and the ruling party declared that they would open an era of $40,000 national income in 2027, the last year of the Yoon Seok-yeol administration, but national income rather took a step back. Per capita GNI, which entered the $30,000 range for the first time in 2017 ($31,734), decreased sequentially in 2019 ($32,204) and 2020 ($30,238), then rebounded to $35,373 in 2021. It was successful, but backtracked once more this year. In particular, Taiwan’s GNI per capita reached $33,565 last year, catching up with Taiwan following 20 years.
The Bank of Korea is optimistic regarding the goal of ‘National Income of $40,000’ amid the prospect that overall economic indicators such as economic growth and inflation will recover. This forecast is supported by the fact that the GDP deflator, a macroeconomic indicator that reflects the overall price level by dividing nominal GDP by real GDP, rose 1.2% from the previous year. Manager Choi said, “For the next two to three years, the average annual real GDP is expected to grow by around 2% and the deflator is expected to rise by around 2%.” Assuming that this is maintained, the per capita income of 40,000 dollars is likely to be achieved in the near future.”
Nonetheless, deterioration in real purchasing power is highly likely to act as a significant negative factor this year amid a full-fledged economic slowdown. Woo Seok-jin, a professor of economics at Myongji University, said, “In situations such as trade deficits, worsening terms of trade, and high exchange rates, even the actual income of our people has shrunk, and the decline rate of 7.7% is quite large.” It was, but it is something to be wary of being reversed by Taiwan, the same Asian country.”
The preliminary real GDP growth rate last year was 2.6%, and the growth rate in the fourth quarter was -0.4%, which was the same as the breaking figure released in January. However, private consumption (-0.6%) and government consumption (2.9%) in the fourth quarter were revised down by 0.2 percentage points from the breaking point.
Reporter Kim So-ra
