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According to Yonhap News,
(SEOUL=Yonhap News) South Korea's gross domestic product (GDP) per capita is expected to top US$30,000 next year, moving up one notch to 24th place worldwide mainly due to the currency exchange rate, two local thinks tanks said Monday.
Predictions made by the LG Economic Research Institute (LGERI) and the Hyundai Research Institute (HRI), two leading private think tanks, based on data collected from the International Monetary Fund (IMF), showed the country's per capita reaching US$30,807 next year from $28,738 in 2014.
The country's per capita ranking rose to 25th place in 2013 among the 35 significant global economies checked and remained unchanged for this year.
The two think tanks, however, predicted Seoul's GDP ranking will remain fixed until 2017, although its per capita will continue to move up to $32,857 in 2016 and $35,388 in the following year.
"Lack of change comes as other countries are expected to grow at a broadly similar pace compared with South Korea," the institutes said.
The data also showed South Korea's gross national income (GNI) per capita standing at around $28,000 this year, up 6.8 percent from $26,205 in 2014.
GDP is the total measure of all goods and services produced in a country, while GNI covers GDP along with income obtained from other countries by its citizens.
LGERI and HRI said while per capita GNI and GDP have been moving up by roughly $2,000 annually for some time, this year's gains are mostly because of the Korean won's appreciation vis-a-vis the U.S. dollar.
Up to last Wednesday, the average exchange rate of the Korean currency versus the greenback stood at 1,052.56 won to the dollar. Last year's average was 1,095 won, while in 2012 it stood at 1,127 won.
Related to the predictions, South Korean policymakers claimed that while the economy is showing signs of some improvement, the recovery momentum remains weak.
"There are growing downside risks for the economy in 2015," Finance Minister Choi Kyung-hwan warned this month.
Others in the government said while the U.S. economy is showing signs of making a firm recovery, global developments as a whole are not favorable, with the weak Japanese yen a source of concern for South Korean exporters. In addition, the country must cope with weak business investment and private spending that could hinder meaningful growth.
Even in the case of the United States, the Federal Reserve may raise interest rates in the new year that could cause a flight of capital from emerging economies, which are key markets for South Korean goods.
Policymakers forecast that 2014 will mark the second year in a row that inflation grew in the 1 percent range, fueling worries that the country may be heading into the kind of crisis that hurt neighboring Japan for the past two decades.
The finance ministry said last week that it is lowering this year's growth forecast from 3.9 percent made a year ago to just 3.4 percent and said inflation will remain unchanged from last year at 1.3 percent.
To stave off such problems, the government has stressed it will adhere to an expansionary policy stance. Seoul's budget has been set at 375.4 trillion won ($341.8 billion), up 5.5 percent from this year, with policymakers making clear it will frontload outlays to give a boost to the economy early on in the new year. To help out with growth, the Bank of Korea lowered the interest rate twice this year.
The government is expected to release official GNI per capita figures in March of next year.
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Source: Yonhap News (December. 29, 2014)