Taiwan Set to Overtake South Korea in GDP Per Capita by 2025
URGENT UPDATE: Taiwan is projected to surpass South Korea in GDP per capita for the first time in over two decades, with estimates indicating a figure of $38,066 for Taiwan compared to South Korea’s $37,430 in 2025. This significant economic shift is fueled by an unexpected surge in Taiwan’s semiconductor and electronics exports.
This development, confirmed by Taiwan’s statistics agency on September 10, 2023, comes just a year earlier than previously anticipated, intensifying challenges for South Korea’s economy, which is grappling with declining profits from major exporters like Samsung Electronics, Hyundai Motor, and LG Electronics.
Taiwan’s export growth has outpaced South Korea’s, with its exports soaring 34.1% year-on-year to a record $58.5 billion in August 2023. In contrast, South Korea’s exports rose a modest 1.3% to $58.4 billion. This marks a critical turning point, as Taiwan’s monthly exports have now eclipsed those of South Korea for the first time.
As of August 22, 2023, South Korea’s nominal GDP growth forecast for 2025 was reduced, with the government projecting a mere 0.9% growth rate. This decline has been attributed to external pressures, including recent US tariff hikes, which began in August 2023.
The narrowing gap between the two nations’ per capita GDP has been notable, shrinking from nearly $10,000 in 2018 to a projected $1,636 in 2025. In 2023, South Korea’s per capita GDP was recorded at $35,129, while Taiwan closely followed at $33,437.
Taiwan’s economy has shown remarkable resilience, with a real GDP growth of 8.01% in the second quarter of 2023, the strongest since 2021. Meanwhile, South Korea’s economy only grew by 0.6% during the same period, highlighting a stark contrast in economic momentum.
Looking to the future, projections indicate that Taiwan could reach a per capita GDP of $41,019 by 2026, surpassing the significant $40,000 milestone for the first time. Conversely, South Korea’s GDP per capita is expected to hover around $38,947 in 2026, potentially falling short of earlier estimates.
The ongoing economic challenges are compounded by the weakness of the Korean won, which has escalated import costs and eroded price competitiveness for South Korean products. Analysts predict that Taiwanese technology companies, especially TSMC, will play a pivotal role in the global AI supply chain, further enhancing Taiwan’s economic position.
WHAT’S NEXT: As this economic narrative unfolds, watch for potential policy responses from South Korea’s government as they seek to adapt to these significant changes. The implications for both countries will be critical, affecting trade dynamics and economic strategies moving forward.
Stay tuned for more updates as this story develops.
