S. Korean income could fall to $15,000

Posted on : 2009-03-12 10:51 KST Modified on : 2009-03-12 10:51 KST
Lee’s unlikely to fulfill his pledge of $40,000 per capita with rising consumer prices and a declining growth rate
 as seen on the board in the dealing room at Korea Exchange Bank in Seoul on March 2.
as seen on the board in the dealing room at Korea Exchange Bank in Seoul on March 2.

The Lee Myung-bak administration’s pledge to increase the nation’s per capita income to US$40,000 seems less likely by the day as per capita income is expected to fall below $15,000 this year. The economic growth rate is also declining. Given the immensity of the economic recession, even the government’s chances of getting the figure to $20,000 appear remote.

On Wednesday, Song Tae-jeong, a senior economist in the management research division of Woori Finance Holdings, predicted that the nation would see a per capita gross domestic product of $14,690 this year, with an economic contraction of four percent, an increase in the GDP deflator to 2.1 percent and an average exchange rate of 1,300 won versus the U.S. dollar. Song based his prediction on the nation’s population of 48.74 million. Owing to the economic recession and the won’s weakness against the dollar, per capita GDP is expected to fall to $17,700 in 2008, from $20,015 in 2007, Song said. If the economy shrinks four percent this year as the International Monetary Fund predicts, per capita GDP will dip below $15,000, and in this scenario, per capita income will be similar to what it was in 2004, when it stood at $14,713, Song said.

All of this makes it unlikely the Lee administration will achieve its goal of increasing the nation’s per capita income, which is similar to its per capita GDP, by 2012 as promised during Lee’s 2007 election campaign.

Lee made the pledge as part of his “747” plan to boost the annual economic growth rate to seven percent, increase the nation’s per-capita income to $40,000 and make South Korea one of the world’s top seven economies.

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