Korea to surpass income levels of Japan, France
Korea’s economy has proved highly immune to market turmoil elsewhere and will maintain a “breakout” growth pattern over five years to catch up with Japan and France in per capita income in purchasing power terms, Moody’s said yesterday.“Sustained rapid growth and economic success is a rare phenomenon in the post-World War II world order,” Moody’s Investors Service said in a report on Korea’s economic outlook.
There are near-term risks to growth from rising public-sector debt and growing household debt over the past decade, Moody’s noted, but it said authorities have taken steps to deal with them.
“With structural reform of the housing mortgage market, a prudent fiscal policy framework, and continued competitiveness and innovation in the private sector, Korea will likely continue on its ‘breakout’ growth trajectory,” it added.
Moody’s said Korea has outperformed the median average annual growth rate of 32 countries with per-capita income of $30,000 or higher in purchasing-power parity (PPP) terms for the past five years and will likely do so this year and next.
The rating agency said Korea’s per-capita income would likely reach $38,451 by 2018 in PPP terms from $31,950 in 2012, compared with $37,826 seen for Japan and $37,647 for France in 2018.
Over the next four years, “Korea will likely remain on a relatively robust growth path, and it will continue to close the gap in living standards with the mature and advanced economies,” it added.
PPP measures a currency’s real purchasing power and could be different from the market exchange rate. Korea’s official per capita income was $24,696 in 2012 at the market exchange rate, or 23 percent less than the figure in PPP terms.
Moody’s sees Korea’s growth pace this year at close to 4 percent - the central bank’s forecast - compared with 3.0 percent in 2013.
Moody’s rates Korea at Aa3, the fourth-highest in the agency’s scale.
Reuters
with the Korea JoongAng Daily
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