Korea’s per capita gross national income amounted to $28,180 last year, up 7.6 percent from the previous year, with its economy growing 3.3 percent, according to data released by the central bank this week. The robust increase in the dollar-denominated per capita GNI was attributed largely to a 3.9 percent rise in the value of the Korean won against the greenback.
Experts estimate Korea ranked 29th in the world last year in terms of per capita income, a gauge of a population’s purchasing power.
The country’s per capita income exceeded the $20,000 mark for the first time in 2006 but has since hovered below the $30,000 level. It tumbled down to as low as $18,303 in 2009 in the midst of the global financial crisis.
Korea may now seem tantalizingly close to achieving the $30,000 goal. In October, a local economic research institute forecast that this year would see the country become the seventh member of the world’s “30-50 Club,” which refers to major economies with a population of more than 50 million whose per capita income surpasses $30,000. This projection was based on assumptions that Korea’s economy would grow 3.6 percent and the value of its currency would remain at an annual average of 1,040 won against the dollar in 2015, with its per capita income reaching $28,831 in 2014.
It is likely, however, that unfavorable economic conditions will make it hard ― if not impossible ― for Korea to make the achievement this year.
In January, the Bank of Korea cut its growth outlook for this year to 3.4 percent from 3.8 percent, while lowering its inflation target to 1.9 percent from 2.4 percent. The central bank is expected to further revise downward its 2015 growth forecast in April when it releases its updated economic figures.
The won-dollar exchange rate, which currently hovers above 1,100 won per dollar, is unlikely to fall below last year’s average of 1,053 won. A possible U.S. interest rate hike might push up the rate higher.
It would be frustrating for Korea to see its per capita income fail to reach the $30,000 target nine years after surpassing the $20,000 mark. It took eight years on average for the world’s 20 most affluent countries to make the accomplishment. In particular, the process took only four years for Germany and five years for Japan.
Korea should make drastic efforts to pull its economy out of the deepening trend of sluggish growth and low inflation.
What is urgently needed is to take substantial measures to reduce household debt, which has grown to more than 160 percent of disposable income, to help spur domestic spending.
Regulations should be scrapped at a more rapid pace and on a larger scale to lift obstacles to boosting corporate investments. It is deplorable that the number of regulatory measures in the service sector has increased over the past year despite the government’s repeated pledges to accelerate deregulation.
Structural reforms should be carried through and social conflicts should be lessened if Korea is to join the group of the world’s wealthiest countries.
