Korea loses spot among world's top 10 economies

Containers are stacked to be shipped off at Busan Port, July 2. Yonhap

By Lee Yeon-woo

Korea ranked 13th in the world in terms of nominal gross domestic product (GDP) last year, failing to retain a spot among the top 10 global economies.

Korea's nominal GDP was estimated at $1.67 trillion in 2022, according to Bank of Korea (BOK) data released on Wednesday.

Nominal GDP is the total value of all goods and services produced in a given period. This indicates the size of a country's economy.

Korea first reached the 10th spot in the global GDP ranking in 2005, but it fell outside the top 10 for several years before reentering it in 2018. Despite falling to 12th in 2019, the country bounced back to the 10th spot in 2020 and held onto that position in 2021.

By country, the United States ranked at the top with a GDP totaling $25.46 trillion. China came in second with a GDP of $17.88 trillion, followed by Japan at $4.23 trillion, Germany at $4.08 trillion, and the United Kingdom at $3.08 trillion. Following them were India, France, Canada, Russia, and Italy.

The three-notch fall in Korea's economic size can be attributed to a dip in overall economic vitality, coupled with a strong U.S. dollar last year. This reduced Korea's nominal GDP when converted into dollars.

In fact, Korea's nominal GDP stood at 2,161 trillion won in 2022, up 3.9 percent year-on-year. However, it decreased 7.9 percent year-on-year in dollar terms due to the impact of a weakening won.

“The nominal GDP ranking of our country seems to have fallen as countries which export resources have seen a strong valuation of their currencies compared to others," a BOK official said. “Most exchange rate conversion indicators (in Korea) are showing poor performance due to the strong dollar last year."

Even though Korea surpassed the GDP of three resource-rich countries, such as Russia, Brazil, and Australia in 2021, it was surpassed by these nations in the subsequent year.

The prospect of Korea reclaiming its place among the top 10 this year also looks slim.

Korea's economic growth this year is forecast to hover around the mid-1 percent range. Additionally, the persistent strengthening of the U.S. dollar could negatively impact nominal GDP when converted to dollars.

“The decrease in (Korea's) ranking is due to the weak won, which has been caused by the country's underperformance in exports. This is depressing the economy,” said Sung Tae-Yoon, an economics professor at Yonsei University. “It is essential to focus on industries beyond semiconductors, as well as sectors that can rekindle long-term growth. Moreover, enhancing the export capabilities of companies is crucial.”