Korea’s GDP fell by 8% last year… largest since the global financial crisis

August 9, 2023 0 Comments

Last year, Korea’s gross domestic product ( GDP ) shrank the most since the global financial crisis, and its economic size ranking fell two notches to 13th. It is evaluated that the structural weakness of the Korean economy, which is heavily dependent on imports of raw materials and exports in certain fields such as China and semiconductors, is reflected.

On the 8th, the Hankyoreh analyzed GDP data of the top 100 economies of the World Bank (WB), and found that Korea’s nominal GDP last year was $1,665.2 billion, down 8% from a year ago . This is the largest decrease since 2009 ( -9.9 %) during the financial crisis. Korea’s GDP in dollar terms jumped 10.1% in 2021 after stepping back by 4.3% and 0.4% in 2019 and 2020, respectively, before and after Corona 19. Then, last year, it started to decline again.

Among the top 100 countries in terms of economic size, countries in which GDP decreased more than Korea last year were Ukraine ( -19.7 %), Sri Lanka ( -15.9 %), Japan ( -15.5 %), Myanmar ( -8.8%), Ghana and Sweden ( -8.8 %). -8%) and only six. Ukraine and Sri Lanka are experiencing war and foreign exchange안전놀이터 crises, and in the case of Japan, the yen-dollar exchange rate soared by 19.8% last year in the aftermath of monetary easing policy. Excluding these, the decline in GDP in Korea is remarkable compared to other major countries.

South Korea’s economic size ranking also went down two notches from 11th in the world in 2021 to 13th last year. It entered the top 10 in 2020, but returned to the level of 2013 (13th) nine years ago.

The reason why the GDP converted into dollars took a big step back is because the Korean won showed a clear weakness due to the trade deficit amid the ‘strong dollar’ phenomenon caused by the US policy rate hike last year. According to the Bank of Korea, the value of the won against the dollar (annual average) plunged 12.9% last year from a year ago (the won-dollar exchange rate soared). The range of depreciation is greater than the euro (11%), British pound (10.1%), Canadian dollar (3.9%), and Swiss franc (4.5%). This is interpreted as the decline in the semiconductor economy, sluggish exports to China, and surge in energy imports, all of which contributed to the depreciation of the won.

But it’s not just the exchange rate. Germany, the UK, France, Italy, and Spain also suffered a similar level of weakening of their currencies last year, but the decline in GDP was smaller than that of Korea. For example, the decline in GDP in 2022 compared to the previous year in Germany was -4.4 %, the UK -1.7 %, France -5.9 %, Italy -4.9 %, and Spain -4.9 %.-2.1 %, etc.

The future is more of a problem. In 2009, Korea’s GDP plunged 9.9% compared to the previous year, but immediately after that, in 2010 and 2011, it rebounded significantly, increasing by 21.2% and 9.5%, respectively. However, it is difficult to expect a steep recovery this year due to the recovery of the semiconductor economy. Some analysts say that the vulnerability of the Korean economy is being revealed in the face of new trends in the global trade order, such as supply chain cracks and reorganizations and the rise of economic security, although statistics have not yet been revealed.

According to World Bank statistics, the nominal GDP per person in Korea last year decreased by 7.8% from a year ago to $32,255. However, among the top 50 countries in terms of economic size, South Korea’s GDP per capita ranked 22nd in both 2021 and 2022. In particular, the income gap with Japan ($33,815 per person), where GDP per person plunged 15.1% last year due to a weak currency, narrowed to $1,560.

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