Korea’s per capita GDP to near Japan’s in 2020: IMF

Korea’s per capita gross domestic product is expected to catch up with Japan within the next five years, according to a growth outlook report of the International Monetary Fund.

The report forecast that Korea’s nominal per capita GDP will reach $36,750 in 2020, up 31 percent from last year’s $27,970. During the same period, Japan’s nominal per capita GDP will grow 6 percent to $38,714.

The IMF’s latest macroeconomic estimates are presented in its World Economic Outlook, which is released twice a year in April and September-October.

“The recent Japanese outbound sales have been low (compared to the beginning stage of Abenomics) to negatively affect the manufacturing industries, while Korean exports are expected to register a steady growth,” said Bae Byoung-ho, a senior economist at the Bank of Korea.

In terms of purchasing power parity, the weak yen against global currencies is another GDP booster, Bae added. Both Japan and Korea release GDP estimates in their national currencies, which the IMF converts into U.S. dollars.

Last year, the per capita GDP based on PPP stood at $35,379 for Korea and $37,519 for Japan. By 2018, the IMF estimated that the Korean numbers are expected to reach $41,966, to surpass Japan’s $41,428 for the first time in history.

“Both the PPP and the total size of the nominal GDP must be considered in estimating economic potentials of the two countries,” said Lee Bu-hyoung, deputy director of Northeast Asia Research Department at the Hyundai Research Institute.

“Apart from the PPP, it is crucial to look into how much the country can actually produce in nominal terms, as well as its progress in economic infrastructure and policy reforms,” Lee said, adding that Korea still has a long way to go before actually catching up with Japan’s long-cultivated economic competitiveness.

By Chung Joo-won (joowonc@heraldcorp.com)