South Korea's GDP to top W3,000tr this year — $40,000 per capita within reach

South Korea's economy is on track to push per capita GDP close to $40,000 this year, driven by a semiconductor boom. Estimates suggest the milestone could be crossed for the first time if the average won-dollar exchange rate falls below 1,456.1 won for the year.

Taiwan, which is reaping similar benefits from the global semiconductor boom, is forecast to surpass $45,000 in per capita GDP this year in a single leap, widening its lead over South Korea.

Based on data from the Ministry of Economy and Finance, the Bank of Korea and the Ministry of Statistics, South Korea's per capita GDP this year is estimated at $39,164 — up $2,750, or 7.6 percent, from last year and the largest annual increase in five years since 2021.

The government raised its nominal growth rate forecast for this year to 12.3 percent in its second-half economic strategy, announced Tuesday. If realized, that would be the highest level in 30 years since 1996. Strong semiconductor exports and improved terms of trade from rising export prices are expected to lift nominal GDP.

Applying that forecast to last year's nominal GDP of 2,676.67 trillion won puts this year's nominal GDP at 3,005.91 trillion won. Converted at the average won-dollar rate of 1,487.19 won — the average through Thursday — and divided by this year's estimated population of 51,609,121, per capita GDP works out to $39,164.

The key variable determining whether South Korea crosses $40,000 this year is the exchange rate. If the annual average won-dollar rate falls below 1,456.1 won — about 31 won lower than the current year-to-date average — per capita GDP would clear $40,000 this year.

Even if the exchange rate stays at current levels, the $40,000 threshold appears within reach next year. Applying the government's nominal growth forecast of 4.6 percent for next year at a similar exchange rate puts next year's per capita GDP at an estimated $41,024. That would mark the first time the leading digit has changed since South Korea crossed $30,000 in 2016 — a gap of 11 years.

South Korea's overall economic size is also set to reach a new milestone. Nominal GDP measured in won is forecast to surpass 3,000 trillion won for the first time this year, eight years after first crossing 2,000 trillion won in 2018.

If the exchange rate holds at current levels, dollar-denominated GDP is also expected to exceed $2 trillion for the first time, reaching approximately $2.02 trillion. South Korea first crossed the $1 trillion mark in dollar terms in 2006.

Taiwan, however, the biggest beneficiary of the semiconductor boom, is outpacing South Korea. Taiwan's statistics authority raised its per capita GDP forecast for this year to $45,610 — about $6,450 more than South Korea's estimate. Taiwan's real growth rate forecast for this year stands at 9.64 percent.

The government has set a medium- to long-term target it calls the "3-4-5 economic leap" — achieving a potential growth rate of 3 percent, ranking among the world's top four exporters, and reaching per capita national income of $50,000. Whether South Korea breaks the $40,000 per capita GDP mark this year, however, will depend on the durability of the semiconductor boom and the direction of the exchange rate through year-end.