SEOUL — South Korea’s per capita Gross National Income (GNI) has remained stuck in the $30,000 range for over a decade, failing to break through the psychological barrier to the $40,000 mark. While the nation’s economy has grown steadily in terms of the local currency (won), a persistently high exchange rate has eroded these gains when converted into U.S. dollars.
The Currency Hurdle
According to the Bank of Korea (BOK) on Tuesday, the 1-person GNI for last year stood at $36,855, a mere 0.3% increase from the previous year. In contrast, when measured in Korean won, the income rose by 4.6% to reach 52.41 million won. This discrepancy highlights the "exchange rate trap": the annual average won-dollar exchange rate hit approximately 1,420 won, the highest since the late 1990s financial crisis.
Losing the Lead to Neighbors
The prolonged stagnation has caused South Korea to slip behind its regional competitors. After briefly overtaking Japan and Taiwan in 2023 and 2024, South Korea was surpassed once again last year.
Taiwan: Reached $40,585 in per capita GNI, fueled by a robust IT and semiconductor boom.
Japan: Reclined to the low $38,000s, partially due to a revision of its base year for economic calculations.
Economic Slowdown and External Risks
The real GDP growth rate for last year was recorded at 1.0%, the lowest since the pandemic contraction of 2020. With ongoing geopolitical tensions in the Middle East driving up oil prices and currency volatility, experts worry that achieving the 2% growth target for this year will be a significant challenge.
"If we assume stable exchange rates, we expect the per capita GNI to surpass $40,000 by 2027," said Kim Hwa-yong, head of the BOK's national income division. However, he warned that the duration of current Middle Eastern tensions will be the deciding factor for Korea's economic trajectory.
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