Per Capita Income Falls to 5-Year Low

By Lee Hyo-sik
Staff Reporter

The nation's per-capita income fell below $18,000 in 2009, hitting a five-year low, due mainly to the falling won against the dollar. But the government expects the income to rebound to $20,000 this year on the back of a fast economic recovery.

The gross domestic product (GDP) expanded at the slowest pace in a decade, as Asia's fourth-largest economy was hit hard by plunging sales at home and abroad as a result of the worldwide financial market turmoil.

The Bank of Korea (BOK) said Friday that Korea's per capita gross national income (GNI) sank to $17,175 last year from $19,296 in 2008. The figure was the lowest since 2004 when each Korean earned $15,082 on average.

In 2009, the Korean won fell about 15.8 percent against the greenback.

Per-capita GNI exceeded $20,000 in 2007 for the first time at $21,659. It took the nation 12 years to double its income. It surpassed $10,000 in 1995 but dropped to $7,355 in the wake of the currency crisis in 1998. Income has since increased in line with economic expansion.

But real GNI rose 1.5 percent last year from a year ago on the back of improved terms of trade on falling oil and other commodity prices. It equals GDP excluding losses and profits stemming from changes in terms of trade and represents people's real purchasing power.

"Koreans' real purchasing power grew in 2009, thanks to favorable terms of trade as a result of tamed oil and other raw material prices. But the per-capita GNI is heavily influenced by the won's value against the dollar. If the won-dollar rate remains at the current rate of around 1,150 won, this year's per-capita GNI will likely exceed $20,000," a BOK official said. The won has been gaining ground this year on the back of active foreign buying of local bonds and stocks.

The Ministry of Strategy and Finance also expects per-capita income to increase to over $20,000 in 2010, projecting the Korean economy will expand around 5 percent this year, on top of the strengthening of the local currency.

The nation's GDP, the total value of goods and services produced within the economy in a given period, grew 0.2 percent last year, the lowest increase since 1998 when economic output contracted by 5.7 percent in the aftermath of the Asian financial market meltdown.

The central bank said the manufacturing sector output declined 1.6 percent from a year earlier, compared with a 2.9 percent gain in 2008, with the construction industry growing 1.9 percent.

Private consumption growth slowed to 0.2 percent in 2009 from 5.1 percent the previous year. The country's gross savings ratio, the ratio of national savings to gross national disposable income, came to 30 percent, down from 30.5 percent in 2008. The figure was the lowest since 1983 when it stood at 28.9 percent.

leehs@koreatimes.co.kr

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