Value context and insight. lkm@koreatimes.co.kr
Korea to lag behind Taiwan in GDP per capita for 1st time in 22 years
Cars are parked for export at Pyeongtaek Port in Gyeonggi Province, Sept 4. Yonhap
By Lee Kyung-min
Taiwan is expected to overtake Korea in per capita GDP this year, data showed Sunday. The reversal after 22 years is explained by Korea’s weakening growth momentum coupled with Taiwan’s rise as a technological and economic powerhouse in the global economy.
As a benchmark for economic performance, higher per capita GDP often implies a more productive economy, but it does not measure income inequality.
The development underscores Korea’s declining competitive edge, eroded by a lack of structural reforms to respond to rapid aging, industrial stagnation and currency weakness.
Many say the difference between the two economies will widen, since Taiwan’s potential growth rate is likely to exceed 3 percent this year, underpinned by a global tech boom and semiconductor value chain, especially amid the rise of artificial intelligence (AI) and high-performance tech advancements.
Korea, on the other hand, will see its figure drop below 2 percent, weighed down by the fallout of political uncertainties from former President Yoon Suk Yeol’s martial law declaration last December and a slowdown in manufacturing sector innovations over the past few years.
According to the finance ministry and Taiwan’s statistics authorities, Korea’s 2025 per capita GDP is expected to be around $37,430 (52.1 million won), lower than Taiwan’s $38,066.
In 2018, Korea had a nearly $10,000 lead in per capita income, but Taiwan has since grown rapidly. Taiwan’s economy grew 8.01 percent in April-June from the previous year.
Korea’s GDP grew only 0.6 percent over the same period, hamstrung by stagnant construction sectors.
Taiwan’s economy has been and is highly likely to remain strong, powered by global demand for semiconductors, AI chips and tech parts manufacturing.
Taiwanese global semiconductor powerhouse TSMC is leading the growth, backed further by expanded manufacturing and tech capacity as well as increased research and development spending.
In contrast, Korea’s economic fundamentals are showing signs of weakness, constrained by a superaged population, ultralow birthrates and overall falling productivity in manufacturing sectors.
Korea’s economic driver — propelled by exports of automobiles, ships and memory chips — is now faltering amid global trade volatility, including tariff uncertainties and technological stagnation.
Compounding the issue is a sustained weakness in the Korean currency, which has depreciated to nearly 1,400 won relative to the U.S. currency.
The economic and political implications are significant, according to Lee In-ho, former economist at Seoul National University.
“A drop in GDP figures could impact Korea’s standing on the global stage, translating into less attractiveness to foreign investors and policy leverages,” he said.
“The contrast could be sharper due to Taiwan’s success, especially in tech sectors leading the AI boom.”
Furthermore, Taiwan is expected to reach the $40,000 per capita GDP milestone before Korea. It is projected to surpass that benchmark as early as next year, with the country’s statistics authorities estimating the figure to come at $41,019.
Korea, in the meantime, is expected to hit the $40,000 level in 2027, assuming no further weakness in the Korean currency, according to the finance ministry’s estimate submitted to the National Assembly last month. If the won remains weak, the timeline could be delayed further, to 2028 or later.