In recent weeks, a set of data released by the South Korean government has captured significant attention, especially regarding its economic performanceOn the 2nd of this month, South Korea’s Ministry of Finance and the Bank of Korea announced that the per capita GDP for 2024 is anticipated to reach approximately $36,024. This figure closely aligns with the prediction made by the International Monetary Fund (IMF) last October, which forecasted a per capita GDP of $36,132 for the same year.

At that time, the IMF also projected that Japan would see a per capita GDP of around $32,859 in 2024. If these forecasts hold true, this marks the second consecutive year that South Korea is expected to surpass Japan in terms of per capita GDPIn 2023, both nations reported their respective GDP figures, with Japan recording $33,849 while South Korea was reported at $35,563.

The contrasting economic performances of South Korea and Japan have drawn interest from analysts and scholars alike

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Examining historical data reveals that the rise of South Korea’s per capita GDP has not been a simple trajectoryAccording to data from the Bank of Korea, the nation experienced numerous fluctuations after its per capita GDP first surpassed $30,000 in 2016. Notably, in 2020, the figure declined to $33,503 due to various factors, including the COVID-19 pandemicHowever, following a gradual recovery, South Korea's economy managed to rebound with its per capita GDP reaching $37,503 in 2021 and then dipping to $34,810 in 2022. The figures for 2023 and 2024 indicate a continuous upward trend, although the growth rate is expected to slow from 2.18% in 2023 to 1.28% in 2024.

On the other hand, Japan’s peak per capita GDP occurred in 2012, when its GDP reached a historic high of $6.27 trillion, and its per capita GDP soared to $49,100. Since then, both values have been on a downward trajectory, with Japan’s per capita GDP falling below $40,000 in 2022 and being overtaken by South Korea in 2023, albeit by a slim margin of $1,714.

Experts, like Kim Yoon-jun, a scholar, noted that the recent economic situation is not surprising

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Factors such as an improved global trade environment in 2024, a sustained growth in semiconductor exports from the previous year, as well as decreasing raw material import prices, contribute significantly to bolstering South Korea's overall GDP.

As South Korea's economy is heavily oriented towards exports, the trade sector is expected to showcase remarkable performanceThe Ministry of Trade, Industry and Energy released the "2024 Import and Export Trends" report, revealing that exports for 2024 may see an impressive growth of 8.2%, reaching a total of $683.8 billionThis figure not only reverses the negative growth experienced in 2023, but also surpasses the previous record set in 2022 of $683.6 billion.

Among Korea's top nine export destinations, seven have reported increasesExports to China, South Korea's largest trading partner, are expected to grow by 6.6%, hitting $133 billion, with semiconductor and shipbuilding industries as the main drivers

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Particularly noteworthy is the semiconductor sector, with a projected export jump of 43.9% to $141.9 billion, accounting for 20.7% of the total annual exports and eclipsing the previous record of $129.2 billion set in 2022.

In stark contrast, Japan’s economic growth prospects for 2024 appear dimAccording to the Cabinet Office of Japan, the actual GDP is expected to decrease by 0.6% in the first quarter of 2024, and growth is anticipated to be sluggish in the second and third quarters, with growth rates of only 0.5% and 0.3%, respectivelyA modest increase of 0.3% is expected in the fourth quarterThe Chief Economist at Dai-ichi Life Research Institute, Toshihiro Nagahama, indicated that for Japan to achieve positive growth in 2024, the fourth-quarter GDP must see a year-on-year growth rate close to 1.3%, which he considers a very high threshold.

Although Japan’s overall GDP data for the fourth quarter of last year has yet to materialize, there is a high probability that the country experienced negative growth again

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Personal consumption, contributing significantly to Japan's GDP, continues to hinder economic recovery, with the Cabinet Office reporting that Japan has faced insufficient demand for five consecutive quarters.

Looking ahead to 2025, the situation remains uncertainThe South Korean government has adopted a cautious approach in its latest economic growth predictions, estimating growth lower than many other organizationsThe OECD projects a growth rate of 2.1% for South Korea in 2025, while the IMF, the Korea Development Institute, and the Asian Development Bank all predict growth at 2.0%. In contrast, the Bank of Korea has forecasted a growth rate of 1.9%. The South Korean government’s estimation, however, stands at a conservative 1.8%, indicating the country is entering a phase of “micro-growth” at or below 2%.

Korean Finance Minister Kim Beom-sik explained that the uncertainties in the global economy remain substantial

While a slow recovery in consumer demand is anticipated, the growth in exports is expected to decelerateSignificant factors such as the concentration of global capital in the United States and domestic instability in South Korea have contributed to increased market volatilityHe warned that the uncertainties domestically and internationally could significantly impact the growth trajectory, the financial foreign exchange markets, and the livelihood of the populationThis implies that even without considering domestic political instability, an economic downturn is unavoidable.

In this complex backdrop, if the South Korean economy is indeed able to achieve the government's expectations for gradual growth in 2025, it may still surpass $37,000 in per capita GDP, potentially reaching $37,441.

However, Lucila Bonilla, a senior economist at Oxford Economics, commented that the market has already factored in the influence of the U.S

economy on South Korea while the political turbulence within the nation is at a critical junctureShe anticipates that market performance may be weaker than expected with heightened volatility unless clear plans for the next presidential term emerge.

She elaborated, stating, “The longer Korea's political volatility persists, the more it could undermine consumer confidence and further dampen investment and consumptionOnly by establishing a timeline for Yoon Suk-yeol's resignation could there be a chance to resolve Korea's current political deadlock and implement coherent policies that encourage economic growth.”

From Kim Yoon-jun's perspective, the factors contributing to Japan's economic slowdown, such as currency depreciation due to a strong dollar and low productivity caused by an aging population, are critical elements that South Korea's economy must not overlook in the future