Last year’s per capita national income seemed to surpass the G7 country for the first time
Italy, which focuses on domestic demand and tourism, hits the corona shock directly
Korea’s Relative Growth Rate’Better’ Due to Strong Exports
Photo = Getty Image Bank
It is estimated that last year, Korea’s gross national income (GNI) surpassed Italy for the first time. If it becomes a reality, it will be the first case in which Korea exceeds the G7 countries (USA, UK, France, Germany, Italy, Canada, Japan) known as’advanced country clubs’. The GNI per capita in Korea decreases by about $1,000, but as Italy decreases to around $3,000, the GNI between the two countries is reversed.
The shock of the novel coronavirus infection (Corona 19) divided the two countries’ joys. The Italian economy, which has a high proportion of service industries such as tourism and domestic demand, plummeted last year due to the impact of Corona 19.
On the other hand, Korea, which has a high proportion of manufacturing and export industries, received relatively less Corona 19 shock than European countries. It was observed that the decline in the growth rate last year was the lowest among major developed countries. Exports significantly offset the impact of Corona 19.
Last year, Korean exports declined by 5.4% compared to the previous year, but considering the global economy, it is said to have been relatively good. In particular, it played a role as a support line to defend against a sharp decline in growth rate, with continued growth for two consecutive months in November and December, mainly in semiconductors.
GNI per capita, overtaking G7 countries for the first time
According to the Organization for Economic Cooperation and Development (OECD) and the Bank of Korea on the 1st, the nominal GNI per capita in Korea decreased from $32,115 in 2019 ($31,42 based on OECD), and it seems to have reached only $31,000 last year. This is because reverse growth of more than 1% is certain. The OECD predicted the growth rate of Korea at -1.1% last year at the beginning of last month. The Bank of Korea is also open to the possibility of a larger decline.
In addition, last year’s won-dollar average exchange rate rose from the previous year, and the continued low inflation is expected to serve as a factor driving down GNI. GNI per capita increases as gross domestic product (GDP) increases, exchange rates fall, or prices rise.
Applying the OECD’s GDP growth forecast and the average exchange rate, the GNI per capita last year is expected to be in the range of $31,300 to $31,300. From the 33,000 dollar level in 2018 to the 32,000 dollar level in 2019, and the 31,000 dollar level last year, it has decreased for the second consecutive year.
Nevertheless, Korea’s growth rate forecast is relatively good compared to that of major overseas countries. In particular, Italy and the United Kingdom, where GNIs have slightly more GNIs than Korea, were hit by a direct hit from Corona 19, and their growth rate is expected to decline significantly last year.
The OECD predicts Italy’s growth rate at -9.9%. The IMF predicted that it would be only -10.6%, which is the lower. In Italy, the GNI per capita in 2019 is $33,205. If the OECD growth rate forecast is applied to this, it will drop sharply to the beginning of the $30,000 range last year. The possibility of sinking to the 20,000 dollar level cannot be ruled out. Experts believe that even considering the euro exchange rate and inflation, it will be difficult to surpass Korea.
Organization for Economic Cooperation and Development (OECD) announced its economic outlook for December. Estimated real gross domestic product (GDP) annual growth. /Source=OECD
The export manufacturing industry has been scattered.
Experts diagnose that the economic structures of the two countries are at odds. Korea has a high export share and a small share of the domestic industry, so it has an economic structure contrary to that of Italy. In Italy, face-to-face consumption declined significantly due to Corona 19 last year, which had a major impact on domestic demand. It is a structure that is more vulnerable to Corona 19, with the tourism industry, which is made up of face-to-face consumption, accounts for 13% of the economy. On the other hand, in Korea, exports, mainly semiconductors, are showing strong performance amid declining consumption. Therefore, investment and industrial production indicators are also enduring the Corona 19 shock.
Experts, however, are concerned that if the Corona 19 is prolonged, the growth rate of Korea can be stiff, like these countries. Professor Kim Jeong-sik of the Yonsei University Department of Economics said, “Corona 19 is also holding the growth this year. If Corona 19 stabilizes at the beginning of this year, growth will continue as the economy rebounds in a V-shaped shape. I looked out.
Professor Kim said, “If the pandemic continues this year, the shock will be spread in earnest to exporting countries such as Korea, following the US and European countries where the service industry was damaged last year,” he said. “Because our country spent a lot of money last year, this year It is also a problem that there is no financial capacity.”
Shin Se-don, a professor of economics at Sookmyung Women’s University, said, “The reason Korea’s growth rate is relatively good is that the won’s value did not drop sharply this year, but the impact that it sustained.” said.
Shin Hyun-bo, Hankyung.com reporter [email protected]