South Korea's per capita gross national income is all but certain to cross the $40,000 threshold this year, the government said on the 27th, after the economy posted surprise growth of 1.0% in the third quarter.
In materials released after the Bank of Korea published its advance estimate of third-quarter real gross domestic product, the Ministry of Finance and Economy said per capita GNI would rise from the $30,000 range to the $40,000 range for the first time in 12 years. The ministry attributed the shift to two favorable factors since it unveiled its second-half economic growth strategy in July: a stronger won against the dollar (a lower won-dollar exchange rate) and an upgraded forecast for nominal growth.
"National income, which had remained in the $30,000 range, now appears set to move into the $40,000 range," Yoo Byung-hee, director general of the ministry's economic policy bureau, said at a briefing. "What is encouraging is that there is momentum for it to rise further."
Applying the International Monetary Fund's forecast of 21.7% nominal GDP growth this year and an average won-dollar rate of 1,463 won through September, the ministry estimated per capita GNI at about $43,500. If the exchange rate holds at the lower 1,300-won level for the rest of the year, the figure could reach $44,000, it said.
The ministry also noted that the IMF projects South Korea's per capita GDP at $44,000 this year, $49,000 next year and $52,000 in 2028.
Nominal GDP also expanded sharply in the third quarter, the ministry said. It projected annual nominal GDP growth of more than 20%, well above its initial forecast of 12.3%.
Real growth could reach the mid-3% range for the full year, the ministry said, as solid momentum has continued despite a high base in the first half.
Private consumption, which fell in the third quarter, should return to growth in the fourth quarter because the underlying recovery trend remains intact, the ministry said. Cash dividends from semiconductor companies in the fourth quarter and performance bonuses in the first quarter of next year will support the pickup in spending, it added.
Still, critics say the warmth of growth led by semiconductor exports has yet to spread sufficiently across domestic demand. The ministry acknowledged that structural problems such as polarization between sectors persist, along with continued pressure on household budgets from prices and other costs.
"We will step up efforts to stabilize livelihoods and ease polarization so that the warmth of growth reaches the lives of all citizens," the ministry said.