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South Korea's GNI per capita falls despite GDP growth.

Photo by Emanuel Ekström / Unsplash

South Korea’s gross national income (GNI) per capita, a key measure of the country’s economic well-being, fell 2.2% in dollar terms in 2022, according to the Bank of Korea (BOK).

The decline was due to the sharp depreciation of the KRW against the US dollar, which offset a 3.8% increase in nominal GDP in KRW terms.

Nominal GDP grew by 3.8% to KRW 215.6 trillion ($186.9 billion) in 2022, despite an 8.1% decline in nominal GDP in 2021, which resulted in a decline in nominal GNI per capita in dollar terms.

GNI per capita, which first reached $30,000 in 2017, increased to $33,564 in 2018 but declined in the following two years, 2019 and 2020, with the pandemic outbreak.

In 2021, South Korea’s economy recovered from the pandemic shock, resulting in a 3% annual decline in the KRW/dollar exchange rate and the first rebound in GNI per capita in three years, to $35,373.

However, the sharp depreciation of the KRW in 2022 caused a further decline in GNI per capita in dollar terms.

South Korea’s real GDP also fell by 0.4% quarter-on-quarter in Q4 2022, with the country’s real gross national income (GNI) falling by 0.1%.

The production side of GDP contracted by 4.4%, with the manufacturing sector being the hardest hit.

On the expenditure side, private consumption declined by 0.6%, while government consumption increased by 2.9%. Construction and equipment investment both increased, while exports declined by 4.6%.

Overall, South Korea’s annual real GDP grew by 2.6% in 2022, despite a 1.0% decline in GNI due to the worsening terms of trade.

The gross savings rate was 32.3%, down 0.5 percentage points from the previous quarter, while the gross domestic investment rate was 33.6%, down 0.9 percentage points.

The GDP deflator, which reflects the overall price level, including imports and exports, increased by 1.2 percent from 2021.

The depreciation of the KRW against the dollar will hamper South Korea’s economic recovery in 2022.

Still, the country’s overall growth in KRW terms bodes well for a strong recovery in the future.

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