Korea GNI per capita drops nearly 8 percent in 2022

Economy

Published: 07 Mar. 2023, 17:41 Updated: 08 Mar. 2023, 12:07

Korea GNI per capita drops nearly 8 percent in 2022

Bank of Korea Gov. Rhee Chang-yong speaks in a debate at the Korea Broadcaster center in western Seoul on Tuesday. [BANK OF KOREA]

Gross national income (GNI) per capita fell almost 8 percent to $32,661 last year, according to the Bank of Korea on Tuesday.

The weak won was cited as a contributing factor.

Last year’s decline has put Korea’s GNI per capita below that of Taiwan's for the first time since 2002. Taiwan reported $33,565 GNI per capita last year.

“The unprecedented fall of the won-dollar exchange rate led the GNI per capita to shrink 7.7 percent on year in dollars.” said Choi Jung-tae, director of national accounts division at Bank of Korea on Tuesday. “An average won-dollar exchange rate fell 12.9 percent last year while that of Taiwan fell 6.8 percent.”

The won hit 1,444.20 won last October compared to 1,191.80 won at the beginning of the year. It started to fall again recently and is now traded at around 1,300 to the dollar.

GNI per capita is the value of a country’s final income in a year divided by its population. The government has used the figure as a barometer of economic development.

“It’s notable that GNI per capital broke $35,000 just four years after $30,000 was broken,” former Finance Minister Hong Nam-ki said last year.

Korea’s GNI broke $30,000 for the first time in 2017 and peaked at $35,373 in 2021.

The government’s goal is to break $40,000 in coming years.

“Korea is expected to achieve $40,000 GNI per capita soon if GDP grows by 1.6 percent this year and 2.4 percent next year in line with the Bank of Korea’s estimates, GDP deflator rises around 2 percent and currency stays at 1,145 won, which is an average figure over the past 10 years,” Choi added.

It took an average of five years for major countries like the United States to break $40,000 in GDP per capita after reaching $30,000.

The central bank “will strive in a direction that could reduce volatility in foreign exchange rate if it grows too excessively,” said Bank of Korea Gov. Rhee Chang-yong in a debate on Tuesday.

Rhee said external factors, including the Federal Reserve’s monetary policy and China’s reopening of its economy, are elements that will play big roles in determining won-dollar exchange rate, more than the decisions made domestically.

The central banker added the Bank of Korea will continue to consider whether to raise the policy rate or keep the rate unchanged until inflation falls to 3 percent range.

The Bank of Korea announced on the same day the country’s economy grew 2.6 percent last year, matching the advance estimate from January.

BY JIN MIN-JI [jin.minji@joongang.co.kr]