Korea's per capita GDP nears $40,000, but Taiwan pulls further ahead
The metric is set for its fastest growth in five years on a confluence of factors, including SK hynix's U.S. listing and a potential strengthening of the won.
Samsung Electronics' High Bandwidth Memory (HBM) 4 and HBM4E semiconductor wafers are displayed at the Nano Korea 2026 exhibition in Kintex in Goyang, Gyeonggi, on July 8.YONHAP
Korea's per capita GDP is on course to grow at its fastest pace in five years and to come within reach of $40,000 for the first time.
The figure is estimated at $39,164 this year, according to data from the Ministry of Finance and Economy, the Bank of Korea (BOK) and the Ministry of Data and Statistics, in what would be a 7.6 percent rise from a year earlier, the largest increase since climbing 11.5 percent in 2021.
However, it will not be enough to catch Taiwan, which is pulling further ahead. Taiwan's Directorate-General of Budget, Accounting and Statistics raised its forecast for the island's per capita GDP on May 29 to $45,610 from $44,000, after lifting its real growth projection for the year to 9.64 percent on the sturdy growth of its AI industry.
Taiwan overtook Korea last year for the first time since 2003, at $39,500 against Korea's $36,414. The gap now looks set to reach $6,446, well beyond the $4,691 the International Monetary Fund projected in its April outlook, which put Korea at $37,412 and Taiwan at $42,103.
The divergence comes down to what each country makes and how many people it has.
Korea's chip industry is built around memory manufacturers such as Samsung Electronics and SK hynix. Taiwan spans a wider slice of AI hardware, from TSMC, the world's largest contract chipmaker, to AI server makers such as Foxconn and Quanta Computer.
Taiwan also has about 23.4 million people, 2.2 times smaller than Korea's population, which flatters any per capita figure.
A woman walks past a TSMC logo at the Hsinchu Science Park in Hsinchu on July 5, 2023.AFP/YONHAP
"Taiwan has a firm grip on AI hardware — foundry, advanced packaging, AI servers — while Korea's industry is built around memory," said Kim Jung-ho, a professor at KAIST's School of Electrical Engineering. "For Korea to get ahead of Taiwan, it will have to put more investment into foundry and packaging."
Even so, the chip upcycle has improved Korea's terms of trade sharply and should spill into domestic demand more than in past cycles.
"As this trend continues for a considerable period, gross domestic income is also expected to maintain stable growth," the central bank said in an issue note released Sunday.
A stronger won is the other reason $40,000 is in play. If the average exchange rate for the year comes in stronger than 1,456.1 won to the dollar, Korea's per capita GDP would clear the threshold for the first time.
Three developments have firmed up that view: SK hynix's American depositary receipt listing in the United States on July 10, the BOK's rate hike on Thursday and a U.S. consumer price index reading on Tuesday that came in below market expectations.
"Foreign money that pulled out when the stock market overheated is coming back in, so I think the won will strengthen gradually through the end of the year," said Min Kyung-won, an economist at Woori Bank. "I'd put the floor for the exchange rate at 1,380 won in the second half."
This article was originally written in Korean and translated by a biligual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
