Korea's GNI rebounds on stable won

South Korea’s gross national income per capita rebounded to over $33,000 in 2023, marking a 2.6 percent rise on-year, while the national economy grew by 1.4 percent, preliminary data from the Bank of Korea showed Tuesday.

The GNI per capita, a measure of the amount of money earned per person in a nation, stood at $33,745 last year, advancing by 2.6 percent from $32,886 in 2022. The figure, drawn up by dividing national income in a year by population, helps evaluate the standard of living.

The rebound in the figure came as Korea's nominal gross domestic product in 2023 grew by 2.4 percent on-year to $1.71 trillion with a relatively stable currency, the central bank assessed.

With the rebound in the GNI per capita, the figure bounced past that of Taiwan just a year after being overtaken. Taiwan’s GNI per capita had surpassed that of Korea in 2022 for the first time in 20 years.

According to Taiwan’s National Statistics, the country’s GNI per capita stood at $33,299 in 2023, $446 short of Korea’s.

“Taiwan’s nominal GNI growth was similar to that of Korea. But the sharp depreciation of the Taiwanese currency pulled down the gross national income,” Choi Jung-tae, head of the national accounts coordination team at the central bank, said at a briefing Tuesday.

“Taiwanese dollar-US dollar currency increased by 4.5 percent last year, showing sharper depreciation of the local currency, as the Korean won-US dollar currency advanced by 1.1 percent,” he said.

Yet though Korea’s GNI per capita has surpassed that of Taiwan, it has remained in the $30,000 box for seven straight years, still unable to grow to the $40,000 range.

Korea's GNI per capita stood at $31,734 in 2017, surpassing the $30,000 mark for the first time. That was 11 years after rising above the $20,000 mark in 2006.

It advanced to $33,564 in 2018 but dropped to $32,204 in 2019 and $32,004 in 2020. After recovering to $35,523 in 2021, it fell by 7.4 percent to $32,886 in 2022 with the Korean won losing value against the dollar in a challenging trade environment.

The central bank projects Korea’s GNI per capita to show a steady increase unless a spike in the currency exchange rate or an external event like COVID-19 takes place again. The exchange rate for a US dollar has stayed at around 1,330 won recently.

Though the Korean won has been losing value against the US greenback as the market deems the US Federal Reserve’s rate cut to happen later than initially expected, the currency rate has remained stable compared to last year.

Meanwhile, Korea's real gross domestic product -- a key measure of economic growth -- increased by 1.4 percent last year, matching an earlier estimate provided in January.

But compared to how the Korean economy expanded by 2.6 percent in 2022 and 4.3 percent in 2021, the 1.4 percent expansion shows the local economy remained relatively slow last year. It was the lowest since a 0.7 percent contraction seen in 2020 amid the COVID-19 pandemic.

In the September-December period last year, Korea’s economy inched up 0.6 percent on-quarter, also in line with an earlier estimate.

Exports increased by 3.5 percent, while imports advanced by 1.4 percent on-quarter. Construction investment dropped by 4.5 percent and infrastructure investment rose by 3.3 percent.

“Recovery of private spending is slow and construction investment is likely to remain weak as well,” Choi said. “But with the recovery of the IT industry, infrastructure investment is likely to rebound. A recovery in exports is projected as outbound shipments of semiconductors rise and China-bound exports increase.”

Korea's GDP deflator, a key gauge of inflation’s effect on the economy, rose by 2.1 percent on-year. The figure measures the reduction in the value of all of the goods and services produced in an economy taking inflation into account.