South Korea is expected to become the seventh country in the world to join the so-called “30-50 club” by the end of the year. It has a population larger than 50 million, and its gross national income (GNI) per capita is estimated to reach 31,243 dollars by December, according to the Bank of Korea. South Korea’s entry into the 30-50 club, a feat only six countries, the United States, Japan, Germany, the United Kingdom, France, and Italy, have achieved, would put South Korea among the world’s top advanced economies. Denmark, Luxemburg, and Singapore also boast the national income per head over 40,000 dollars, but take a relatively minor share of the world’s economy due to small population.
It has taken 12 years for South Korea to reach per capita income of 30,000 dollars since it surpassed the 20,000-dollar mark in 2006. What delayed the growth was the 2008 global financial crisis, which pushed the country’s economic growth rate down to the three percent level. It took five years for Japan, and eight years for the United States and the United Kingdom to do the same, and Germany, France, and Italy had to wait for 13 to 15 years.
However, it is too early for us to bask in celebration, as the country’s current economic indicators paint a not-so-rosy picture. First, the growth rate, which is directly related to GDP per capita, has been on a steady decline, with this year’s figure expected to be lower than 2.7 percent and remain at the mid two percent level next year, at best. Amid the low growth, businesses are facing tougher environments, sending a warning sign that the manufacturing industry, which has led the Korean economy, is now at risk. External conditions such as the rise of protectionism and a prolonged trade war between Washington and Beijing are also far from being favorable to domestic businesses.
Meanwhile, though its GDP per capita is nearing the 30,000-dollar mark, South Korea is witnessing a widening gap between the rich and poor, which causes serious social conflicts. Income-led growth policies pursued by the current Moon administration are leading to side effects in terms of employment and the income level of those in the lowest income bracket, contrary to earlier expectations.
Moreover, the country’s population exceeded the 50 million-mark for the first time in 2012 and recorded around 51 million last year, but is also expected to decline starting from 2028 back to the 40 million level before 2045, according to Statistics Korea.
The world’s six economies comprising the 30-50 club were already great powers at the time of World War II. South Korea would be the only country to join the club that had gained independence after the second World War. As Japan experienced the lost 20 years, the six countries also had to go through an economically tough time following their achievement of a 30,000-dollar mark. Therefore, now is the time for all South Korean players including the government, businesses, and households, to put heads together to overcome pressing challenges such as a low birthrate, aging population, low growth, and a growing income gap.