Nominal GDP to Surpass $1 Tril. in 2010
By Lee Hyo-sik
Staff Reporter
South Korea's nominal gross domestic product (GDP) will likely exceed $1 trillion this year for the second time in history, with Asia's fourth largest economy expanding over 5 percent from 2009. A stronger Korean won against the dollar will also help boost the value of domestic output in dollar terms.
The Ministry of Strategy and Finance said Tuesday that the nation's nominal GDP is estimated to fall to $820 billion in 2009 from $928.7 billion the previous year, due mainly to the won's weakness against the greenback. The won-dollar rate averaged 1,276.4 won last year, compared with 1,102.59 won in 2008.
But measured by the local currency, Korea's nominal value of goods and services produced in the country reached 1,050 trillion won in 2009, up 26 trillion won from a year earlier, as the economy grew 0.2 percent year-on-year.
On the back of the strengthened won against the dollar in 2007, Korea's nominal GDP surpassed $1 trillion for the first time in history at $1.049.3 trillion. The local currency was traded at an average of 929.2 won against the greenback.
``Our GDP fell sharply in dollars last year as the Korean won lost substantial ground against the greenback in the aftermath of the international financial crisis. But in 2010, the local currency has and will likely continue to strengthen against the dollar, which will bolster the value of domestically produced goods and services in the key currency. Additionally, the economy is expected to expand by over 5 percent. These will push up Korea's output closer to $1 trillion,'' a ministry official said.
Given the 5-percent growth projection for 2010, GDP will reach as high as $1.02 trillion this year if the average won-dollar rate falls to 1,100 won. If the rate hovers around at 1,150 won, the value of the nation's output will amount to around $970 billion, the ministry official said.
``Despite a fall in the dollar-denominated GDP last year, we think Korea retained its status as the world's 15th largest economy, with other major economies also taking a blunt hit from the worldwide economic downturn. It will be difficult for the nation to move up in the GDP ranking in 2010, despite its strong economic rebound, as Australia, the world's 14th largest economy, is also expected to expand for the second consecutive year,'' the official said.
Korea was the 14th largest economy in the world in 2007. But its ranking fell by one notch in 2008 when Australia produced a larger value of goods and services.
The Netherlands, the 16th largest, will likely remain sluggish this year along with other struggling European economies.