economy
Entered 2024.04.29 18:20 Modified 2024.04.30 01:37 Paper A5
Bank of Korea, GDP statistics by country
Downhill from the top 10 for 3 consecutive years in 2020
“Labour, pension and education reforms must be implemented quickly.”
Last year, Korea’s gross domestic product (GDP) ranked 14th in the world, down one rank from a year ago. It is behind Mexico in Central and South America, and is the lowest in 11 years since 2012. It is noted that structural reform is urgently needed to raise the potential growth rate.
According to the Bank of Korea’s economic statistics system on the 29th, Korea’s nominal GDP last year was $1.7128 trillion (based on the Organization for Economic Cooperation and Development), an increase of 2.3% from $1.6739 trillion in 2022. During the same period, it fell world ranking from 13th to 14th. Nominal GDP expressed in dollars is a representative indicator for comparing the economic size of countries.
This is the first time since 2012 that Korea’s GDP has ranked 14th. Korea entered the ‘Top 10’ in 10th place in 2018 and 2020, but has been behind for three consecutive years starting in 2021.
The country that has surpassed the economic size of Korea is Mexico. Mexico’s nominal GDP last year was $1.7889 trillion, an increase of more than 20% from the previous year ($1.4633 trillion), rising to 13th place. The United States (USD 27.348 trillion) and China (USD 17.7948 trillion) retained the first and second places, respectively. Germany (USD 4.4561 trillion) moved up to 3rd place, and Japan (USD 4.2129 trillion) fell to 4th place. Analyzing the factors that changed the GDP positions of Korea and Mexico last year, experts explained that Mexico had a greater impact than Korea. As the war for hegemony between the United States and China intensifies, major countries, including China, have begun to invest in ‘near-shoring’ to build factories in Mexico. Mexico’s foreign direct investment last year was $36.1 billion, an increase of 2.2% from 2022.
Korea’s growth is slowing. The real GDP growth rate last year was just 1.4%, as calculated by the Bank of Korea. It decreased by 1.2 percentage points from 2.6% in 2022. It also fell short of Korea’s potential growth rate (2%) estimated by international organizations.
Experts assess that “the Korean economy has entered a period of long-term low growth due to delays in structural reforms such as labor, pension and education.” Research organizations such as the Korea Development Institute (KDI) and the Bank of Korea warn that if these structural problems are not resolved, Korea could soon fall from a low-growth country to a no-growth country. Regarding this, Bank of Korea Governor Lee Chang-yong also said, “With structural reform, (the growth rate) will rise to 2%.” International organizations are discussing the possibility of a further decline in Korea’s GDP position. In its recently released economic forecast in April, the International Monetary Fund (IMF) predicted that Indonesia will overtake Korea in GDP by 2029. Korea’s GDP ranking was expected to drop to 15th.
Reporter Kang Jin-gyu josep@hankyung.com
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