Korea GNI per capita at record on strong economic growth

South Korea’s gross national income (GNI) per capita hit a record high last year on strong economic growth, as well as the firm won currency and higher inflation. The income is unlikely to increase further this year, given external risks such as Russia’s invasion of Ukraine.

The GNI per capita grew 10.3% to an all-time high of $35,168 in 2021 from the previous year, according to the Bank of Korea on Thursday. The expansion was the largest since 2010 when per capita income rebounded 20.9% following the 2008-09 global financial crisis.

The GNI per capita, the dollar value of a country's final income in a year divided by its population, reflects the average before-tax income of a country’s citizens.

South Korea was one of the world’s poorest countries with a GNI per capita of $57 in 1953. The income exceeded the $10,000-level in 1994, the $20,000-mark in 2006 and the $30,000-level in 2017. The income, however, fell in 2019 and 2020 on the US-China trade dispute and the COVID-19 pandemic.

The GNI per capita rebounded last year as real gross domestic product (GDP) growth, the GDP deflator and the won’s value – key components of the income – were higher than 2020.

Asia’s fourth-largest economy expanded 4% in 2021, the fastest pace since 2010, while the won currency appreciated 3% against the dollar. The GDP deflator, a measure of the level of price increases for all the new, domestically produced, final goods and services in an economy in a year, stood at 2.3%.

RUSSIA-UKRAINE CRISIS, WEAKER WON

This year’s GNI per capita was estimated to rise 6.1% to $37,313, based on the BOK’s economic growth forecast of 3% and inflation expectation of 3.1%, as well as the won’s average value of 1,144.4 per dollar last year.

But the income may not rise to the $37,000 level as the South Korean currency has averaged 1,196.5 so far in 2022, 4.6% weaker than a year earlier. Economic growth is also expected to slow on external risks such as Russia’s military attack on Ukraine.

The country’s potential economic growth in 2021-2022 fell to a historic low of 2%, according to the BOK. Korea Institute of Finance forecast the potential growth will continue to fall steadily to below 1% in 2030.

Some predicted Taiwan’s GNI per capita to top the income of South Korea. Taiwan’s GNI per capita in 2021 was expected to have risen 6.3% to $35,759.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jongwoo Cheon edited this article.