SEOUL, KOREA - Kang Jung-gu, research fellow with LG Economic Research Institute, said on November 16 in a report “Per-capita GDP to Surpass That of Japan in 5 Year” that Korea’s per-capita GDP will surpass the US$40,000 level in 2019 by the International Monetary Fund criteria and in 2020 by the criteria of the Organization for Economic Cooperation and Development, exceeding that of Japan.
Up until the 1990s, Japan’s gross domestic products were in excess of $40,000 when Korea barely achieved the $20,000 milestone. According to the International Monetary Fund, the Korean economy would grow 5.2 percent in nominal terms while the Japanese economy 2.2 percent. Given the current weak yen situation, Japan’s per-head GDP is likely to remain at the $37,000 level for the time being while that for Korea would rise to $27,000, narrowing the difference between Korea and Japan to 1:1.3.
The difference is projected to be narrowed for the coming several years. In terms of purchasing power parity, Korea’s per-capita GDP will overtake that of Japan as early as 2016 as Korea’s overall prices are lower than those of Japan.
According to LG Economic Research Institute, most developed countries experienced strong currencies at the time of breaking the $20,000 per-capita income level. Korea was no exception to this rule, exhibiting a pattern of accelerating income level. For the past five years, Korea’s per-person GDP has risen 55.5 percent, of which 45.3 percent was due to currency effects, the private economic think tank said.
It said, “Gaining higher income through currency effects without concurrent efforts in productivity improvement and innovation is not health for the whole economy and there is no telling whether the Korean economy will experience the same income stagnation as the Japanese.
Article provided by The Korea Economic Daily
