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By Yi Whan-woo
The government faces a bumpy road in increasing gross national income (GNI) per capita to $40,000 as promised by President Yoon Suk Yeol during his five-year term, due to a prolonged economic slowdown.
GNI is the amount of money earned by its people and businesses at home and abroad. It is used to measure a country's wealth.
According to the Bank of Korea's (BOK) preliminary data, GNI per capita stood at $32,886 last year, down from $35,523 in 2021 and sliding to the $32,000 level again since 2020 when the pandemic was at its height and lockdowns curtailed economic activity.
The fall in GNI per capita last year came as the country posted the lowest growth in two years at 2.6 percent
Under the circumstances, the government appears to be geared toward lowering the growth forecast for this year after keeping it at 1.6 percent.
Such possible downward revision, as hinted by Minister of Economy and Finance Choo Kyung-ho this week, comes after it downplayed such revisions made by multiple financial institutions here and abroad.
For instance, the OECD projected this week that the Korean economy will grow at 1.5 percent, down from its previous outlook of 1.5 percent in March.
The organization also slashed next year's growth forecast for Korea to 2.1 percent from 2.3 percent.
"And the fact that even the government opts for cutting the economic outlook suggests achieving GNI per capita of $40,000 is becoming tougher," said Lee Sang-ho, head of the economic policy team at the Korea Economic Research Institute (KERI).
He noted achieving annual growth in a range of 2 percent is necessary to make it easier to reach the aforementioned GNI per capita during Yoon's presidency.
"Such a growth rate is unlikely considering exports show little sign of improvement," Lee said, pointing out that outbound shipments declined for the eighth consecutive month as of May and that the trade balance remained in the red for the 15th straight month.
The economist also said a weakened Korean won against the dollar compared to the past complicates the goal of reaching the GNI per capita of $40,000.
The Korean currency was traded at 1,294.61 won per dollar on average between January and May this year, up from 1,166.11 in 2019 and 1,144.61 in 2021, according to the Seoul Money Brokerage Services.
Moreover, the won-dollar exchange rate is not likely to fall to the pre-pandemic level due to multiple related risks, such as price hikes in raw materials and higher import costs, according to the market observers.
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