South Korea’s per capita GNI falls 1.1% in 2020

Posted on : 2021-03-05 16:42 KST Modified on : 2021-03-05 16:42 KST
Per capita GNI has remained above US$30,000 for four years in a row
The photo shows shipping containers at the port of Busan. (Yonhap News)
The photo shows shipping containers at the port of Busan. (Yonhap News)

Last year, South Korea’s per capita gross national income (GNI) dropped to US$31,000 because of negative growth and a weak won.

The Bank of Korea released the provisional figures Thursday for GNI in the fourth quarter (Q4) of 2020 and the entire year. Last year’s per capita GNI, a figure that reflects the country’s standard of living, stood at US$31,755, representing a 1.1% decrease from the previous year (US$32,115).

Denominated in won, Korea’s per capita GNI increased by 0.1% to 37.47 million won. But the average won to dollar exchange rate last year rose 1.2% (representing a weaker won), causing the dollar-denominated per capita GNI to fall.

This was the second year in a row that per capita GNI decreased (following a 4.3% drop the previous year). But per capita GNI has remained above US$30,000 for four years in a row, since first reaching that milestone in 2017 (US$31,734).

“Major countries will also post a big drop in per capita GNI along with a high degree of negative growth last year,” predicted Shin Seung-cheol, who is in charge of the national accounts division at the Bank of Korea.

GNI in purchasing power parity (PPP) only fell by 0.3% because the price of imports fell more than exports.

In Q4 2020, Korea’s real gross domestic product (GDP) rose by 1.2% from the previous quarter. That was 0.1 points higher than an earlier estimate released in January (1.1%).

Korea’s real annual growth rate remained the same, at -1.0%. The private sector dragged the growth rate down by 2 points, while the government boosted it by 1 point.

The nominal GDP, which accounts for inflation and is used to determine the size of the national economy, increased by 0.3% to 1,924.5 trillion won (US$1.7 trillion). That reflected an improvement of 1.3% in the GDP deflator, driven by improving trade conditions.

The GDP deflator, which is calculated by dividing nominal GDP by the real GDP, shows the level of inflation across the entire economy, including not only consumption but also investment, imports, and exports.

“We were concerned to see a negative GDP deflator in 2019. Last year, it returned to positive territory, which should have a positive effect on the Korean economy,” Shin said.

Last year’s gross savings rate (35.8%) was up 1.1 points. In Q4, the rate hit 37.2%, the highest level since Q3 2017 (37.7%).

Disposable income increased by 1.8%, while spending (more specifically, final consumption expenditure) fell 0.6%, impacted by the COVID-19 pandemic.

By Han Gwang-deok, finance correspondent

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