Stronger Won, Faster Growth Put South Korea’s Per Capita GNI Within Reach of $40,000

South Korea’s per capita gross national income is increasingly within reach of $40,000 for the first time as the won stabilizes and nominal economic growth looks set to outpace the government’s forecast.

Officials at related ministries and the Bank of Korea say nominal gross domestic product growth could exceed the 12.3% forecast the finance ministry presented in its second-half economic strategy. The stronger outlook follows second-quarter real GDP growth of 0.6% from the previous quarter, well above the Bank of Korea’s estimate of 0.2%.

A government official said semiconductor prices and export growth are running well above initial projections. As a result, nominal growth this year could rise well past 12.3% and approach 20%, the official added.

The bigger nominal economy is also pushing per capita GNI closer to $40,000 this year. Applying the finance ministry’s 12.3% nominal growth forecast and the average won-dollar exchange rate of 1,485.5 through July 30 yields an estimated per capita GNI of about $39,150.

If nominal growth reaches 12.3%, per capita GNI would top $40,000 if the annual average won-dollar exchange rate falls to about 1,450. That would require the exchange rate to average roughly 1,410 from July 31 through year-end.

The won’s recent rebound has improved the chances of crossing the $40,000 threshold. Officials say the recent decline in the exchange rate means such a move is not out of reach.

A higher nominal growth rate would further ease the exchange-rate condition. If growth beats the government’s forecast, per capita GNI could exceed $40,000 even with the annual average exchange rate above 1,450 won per dollar.

Kim Ik-hwan, Hankyung.com reporter lovepen@hankyung.com