Weak won drops per capita income to a five-year low

Korea’s gross national income per capita fell to a five-year low of a little over $17,000 last year due to a weak won, the Bank of Korea reported yesterday.

The country’s per capita gross nation income was $17,175 in 2009. This was lower than $19,296 in 2008, $21,659 in 2007, $19,722 in 2006 and $17,531 in 2005.

The low per capita income is attributed to a weak currency as investors, for a large part of last year, preferred dollar-denominated assets as the economic crisis that started in late 2007 spread around the globe.

GNI consists of the total value produced within a country plus income received from other countries minus similar payments made to other countries.

“The value of the won declined 15.8 percent last year and Korea’s per capita income declined when it was converted to its dollar value,” said Kim Myung-ki, director of the economic statistics department at the BOK.

The won fell to 1,575 won ($1.38) against the dollar on March 2, 2009. That was last year’s low point.

In terms of the won alone, however, the country’s per capita GNI grew to 21,923,000 won last year from 21,275,000 won in 2008.

“Per capita GNI is significantly influenced by exchange rates,” Kim said. “If the exchange rate stays at the current level, Korea’s per capita GNI is expected surpass $20,000 this year.”

The dollar finished at 1,138.7 won at the local exchange yesterday.

Not all news yesterday was equally bad. Figures showed that Korea’s gross domestic product grew 0.2 percent last year from a year ago. This was in line with the central bank’s forecast announced in January. It was still the lowest growth in 11 years since a negative 5.7 percent growth in 1998 when the Asian financial crisis hit the country. The country’s GDP growth rate has declined from 5.2 percent in 2006, to 5.1 percent in 2007 and to 2.3 percent in 2008.

The effect of the current economic slump was felt throughout industries last year. Manufacturing had a negative growth of 1.6 percent in 2009 compared to positive growth of 2.9 percent in 2008. The agricultural and fishery sector expanded 1.6 percent last year. But that was still lower than 5.6 percent the year before.

For the forecast for the first quarter of this year, Kim said, “Looking at the current economic performance, the GDP growth rate is expected to be well above that of the last quarter of 2009. The weak growth in the fourth quarter of last year is seen as a temporary adjustment.” The country’s GDP expanded 0.2 percent in the final quarter of 2009.

By Limb Jae-un [jbiz91@joongang.co.kr]