Korea‘s GDP per capita to surpass $40,000 in 2026: S&P

[Graphics by Song Ji-yoon ]

International credit appraiser S&P Global Ratings has projected that South Korea’s gross domestic product (GDP) per capita will surpass $40,000 in 2026, while maintaining its credit rating on the country at “AA,” with a stable outlook.

S&P announced on Tuesday that it expects Korea‘s GDP per capita to rise to $35,000 in 2024 and $37,700 in 2025 before reaching $45,000 in 2026.

The country’s GDP per capita rose from $31,727 in 2020 to $35,128 in 2021, before falling to $32,410 in 2022 and then rising again to $33,128 a year later, the Bank of Korea said on the same day.

S&P‘s projection reflects optimism about the rapid speed of Korea’s economic growth, but given its declining birthrates and aging populations, the country needs even stronger growth to rise to the ranks of advanced nations, according to observers.

Korea’s potential growth rate has already slowed significantly, with its potential growth rate falling below 2 percent in 2023 for the first time ever according to the latest Organization for Economic Cooperation and Development (OECD) estimates. The figure is expected to drop further to 1.7 percent in 2024, when it will be lower than even the United States’ 1.9 percent.

S&P maintained Korea’s long-term sovereign credit rating at ‘AA,’ the first time the global credit appraiser has announced the country’s credit rating since April 2022.

S&P raised Korea‘s sovereign rating to ’AA‘ from ’AA-‘ in August 2016 and has maintained it since, while also projecting that the Korean economy to grow 2.2 percent in 2024 and inflation to fall to 2.6 percent during the same period from 3.6 percent a year ago.

In response to the S&P evaluation, the country’s Ministry of Economy and Finance observed that the agency “reaffirmed its strong confidence in our economy” and “particularly appreciated our strong growth prospects and external soundness.”

S&P also mentioned the potential risk of ’contingent liabilities‘ in the event of the collapse of the North Korean regime but forecasted that these would not be prominent enough to undermine Korea’s economic foundation.