Per capita GDP could shrink this year: study

The nation’s gross domestic product per capita could shrink for the first time in six years.

LG Economic Research Institute on Monday projected that this year Korea’s GDP per capita could be $27,600. This would be 1.7 percent smaller than the $28,100 reported last year.

If so it would be the first time since 2009 that the country’s GDP per capita has fallen from the previous year.

In 2009 the nation’s GDP per capita shrunk 2 percent when the global financial meltdown affected the Korean economy. It went from $23,102 in 2008 to $18,337.

The government initially was targeting a $30,000 GDP per capita for this year. However, declining exports, a drought and the outbreak of Middle East respiratory syndrome (MERS) have affected economic growth.

LG research center has projected the economy will grow 2.6 percent in 2015, which is lower than the Bank of Korea’s 2.8 percent projection and far slower than the Finance Ministry 3.1 percent prediction. There are growing doubts over whether the Korean economy could even achieve 2.8 percent growth. In the second quarter the economy grew only 0.3 percent compared to the previous quarter, which is a significant drop from the 0.8 percent growth registered in the first three months of this year.

“Korea’s potential growth has dropped a level and therefore it is in need of structural reform,” said Lee Geun-tae, economist at LG ERI. “It is crucial to find a new growth momentum within the domestic market.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]