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(News Focus) S. Korea's per capita income tops US$30,000; experts warn against complacency

All Headlines 18:48 March 05, 2019

By Kim Kwang-tae

SEJONG, March 5 (Yonhap) -- South Korea's per capita income has surpassed the US$30,000 mark, the latest milestone in the country's meteoric rise from one of the world's poorest nations to one of the richest in just a few decades.

The Bank of Korea (BOK) said Tuesday that South Korea's per capita gross national income (GNI) -- a gauge of the population's purchasing power -- reached $31,349 in 2018, up 5.4 percent from $29,745 tallied in 2017.

The predicted step up makes South Korea the seventh country in the world to join the so-called 30-50 club of economic powerhouses that have per capita income exceeding $30,000 and a population of over 50 million people.

This graph using data by the BOK shows S. Korea (in red) becoming the seventh country in the world with a population of over 50 million to attain per capita income of US$30,000. Other countries that made the list (top to bottom) are the United States (in blue), France, Germany (in yellow), Britain, Japan and Italy. (Yonhap)

It represents a dramatic increase from 1953 when South Korea's per capita gross national income stood at just $67 as it was struggling to rebuild its economy following the devastation brought on by the 1950-53 Korean War.

South Korea's economic prowess was evident in 2000 when South Korea became a donor country after having been a key recipient of aid from the United Nations some 50 years earlier. This dramatic rags-to-riches success story has inspired many developing nations to learn from the country's experience and to follow in its footsteps to build industry and provide wealth for their populations.

But now, the country as a whole is facing daunting challenges in keeping alive its economic momentum amid adverse developments at home and abroad.

In 2018, South Korea's unemployment rate stood at 3.8 percent, a record high since the 4 percent tallied in 2001. The economy as a whole added just 97,000 jobs in 2018 from a year earlier, making it the smallest increase since 2009.

The most updated jobs report due to be released next week is not likely to provide positive news either, with many cautioning that weak job numbers are more than possible.

Besides the job market, South Korea's outbound shipments fell 11.1 percent in February from a year earlier, marking the third consecutive month that outbound shipments declined.

This does not bode well for a country that aims to pull off $600 billion in exports for the second straight year in 2019 amid global trade frictions linked to growing protectionist measures being undertaken by countries like the United States.

Weaker exports, in particular, are a source of serious concern as South Korea relies heavily on trade to generate growth.

Ju Won, a senior researcher at Hyundai Research Institute, said ordinary South Koreans, especially those in low-income brackets, are unlikely to feel any changes that can come with the per capita income surpassing the critical milestone due to income inequality that has actually widened in recent years.

The monthly average income of the bottom 20 percent income bracket dropped 17.7 percent on-year to 1.23 million won ($1,090) in the October-December period, according to the data compiled by Statistics Korea.

In contrast, households in the upper 20 percent income range earned 9.32 million won per month during the fourth quarter, up 10.4 percent vis-a-vis the same three-month period in 2017.

Experts, moreover, warned against widespread complacency regarding South Korea's economic prospects despite slowing growth numbers.

The South Korean economy expanded 2.7 percent in 2018, down from a solid 3.1 percent the previous year.

Reflecting this, Moody's Investors Service has revised down its growth outlook for South Korea's economy this year to 2.1 percent. The sovereign rating agency cited a weakening of the investment cycle and the deceleration in global trade as well as subdued demand for intermediate products from China, especially semiconductors.

China is a major trading partner for South Korea, with semiconductors being one of the country's top products.

"There are concerns that South Korea may remain on the periphery of advanced countries due to a decline in the working-age population and aging population," Lee Geun-tae, a research fellow at LG Economic Research Institute, said.

(News Focus) S. Korea's per capita income tops US$30,000; experts warn against complacency - 2


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