Per-capita GDP may surpass $30,000 by 2017

Korea's per-capita gross domestic product (GDP) may surpass the $30,000 mark around 2017, but whether it achieves the target will hinge on sustained economic growth and the pace of the local currency's gain, analysts said Thursday.

The International Monetary Fund (IMF) said in October that South Korea's per-capita GDP may reach $31,825 in 2017 from last year's estimate of $23,021.

If achieved as predicted, it will have taken about 10 years for South Korea's per-capita GDP to surpass the $30,000 level from the $20,000 mark.

South Korea's per-capita GDP surpassed the $20,000 mark for the first time in 2007 to reach $21,590, but the global financial crisis led the per-capita GDP to fall below the level for two straight years in 2008 and 2009.

Experts said that sustained economic growth, along with the local currency's gain, would help further raise the per-capita GDP.

A stronger local currency makes the dollar conversion value of the per-capita GDP larger.

"If the per-capita GDP is to surpass the $30,000 mark in about four years, the local currency should appreciate above 800 won per dollar theoretically when the full-year economic growth is presumed to reach 3 percent and inflation growth is predicted to hit 2 percent," said Jun Min-kyu, an economist at Korea Investment & Securities Co.

"But it may be not easy for Korea to see its per-capita GDP above the $30,000 mark by 2016-2017 as the won's sharp gain would burden the export-dependent economy."

Based on the assumption, the Korean currency should appreciate about 33 percent to the dollar from the current level.

The Korean currency rose 7.58 percent to the greenback last year alone, the strongest gain since 2009.

The won's gain mainly came as foreign investors are seeing Korean assets as relatively safe ones amid the protracted eurozone debt crisis.

A spate of sovereign rating upgrades by global credit appraisers last year and quantitative easing by advanced economies also spurred foreign capital inflows to Korea.

But the won's appreciation also causes concerns among economic policymakers as the Korean currency has ascended to the dollar even though economic growth has slowed.

South Korea's economy is likely to grow some 3 percent this year, running below its long-term growth potential rate of around 3.8 percent.

The local economy's growth rate for last year is estimated to be in the 2-percent range on soft exports and sluggish domestic demand, buffeted by the global economic slowdown.

Analysts said that South Korea needs to reduce its reliance on exports for growth down the road by boosting domestic demand.

"Currency is a factor in raising the value of the per-capita GDP, but what's more important is to post sustained economic growth," said Kim Yoon-gee, a senior economist at the Daishin Economic Research Institute.

"Over the long haul, Korea needs to pump up efforts to raise the contribution of domestic demand to its economic growth."

As South Korea heavily depends on exports for its economic growth, the country is still susceptible to slumping overseas demand when the global economy cools down.