Taiwan set to overtake Korea this year as growth gap narrows

South Korea’s climb toward a $40,000 per-capita gross domestic product is slowing: recent government data predicts the milestone can be reached by 2027 at the current pace, but this could slip to 2028 if the won weakens further.

According to estimates based on government data on Sunday, Korea’s per-capita GDP is expected to reach $37,400 this year and $38,900 in 2026 before surpassing $40,000 two years later. Last year, the figure was confirmed at $36,200.

The projections are based on the Finance Ministry's latest five-year forecast for nominal growth, which sees GDP expanding 3.2 percent in 2025, 3.9 percent in 2026 and 2027, 4 percent in 2028, and 4.1 percent in 2029. These rates are then applied to last year’s $1.87 trillion total GDP and divided by Statistics Korea's population outlook for each year.

After topping $40,000 in 2027, per-capita GDP is projected to climb to $42,200 in 2028 and $44,000 in 2029.

However, maintaining such a pace is expected to be challenging, as Korea has consistently fallen short of expectations in recent years.

Per-capita GDP first topped $30,000 in 2016 and climbed to $35,400 two years later, prompting projections at the time that $40,000 would be reached by 2023. That trajectory was derailed by the pandemic and a slowing economy, with the headline figure falling for two straight years in 2019 and 2020 and hovering in the $33,000 range.

The number then rebounded to $37,500 in 2021 on the back of stimulus measures and post-pandemic recovery, only to slip again to below $35,000 in 2022 as rising interest rates and weak domestic demand weighed on growth.

In the years ahead, currency volatility is expected to be the key variable. The $40,000 in 2027 target is assumed on last year's average exchange rate of 1,364 won per dollar.

But the won has weakened sharply in 2025, averaging 1,414 won per dollar as of Friday, after briefly nearing 1,500 won earlier in the year amid political unrest and expanding trade risks.

At the current level near 1,390, per-capita GDP would fall just short of $40,000 in 2027, at around $39,800, before climbing to about $41,400 in 2028.

As Korea struggles, Taiwan is catching up fast: its government projects nominal per-capita GDP to exceed $38,000 this year, overtaking Korea for the first time in 22 years.

Korea once led by nearly $10,000 in 2018, but the gap has narrowed as Taiwan’s economy outperformed on strong chip exports. In the second quarter, Taiwan’s GDP jumped 8 percent from a year earlier, its second-highest on record for the period, while Korea managed just 0.6 percent on-year growth.

The gap in real growth has widened, with Korea trailing Taiwan every year since 2019. Korea’s economy grew 2 percent last year, less than half of Taiwan’s 4.3 percent. Growth is expected to slow further this year for Korea, with the government forecasting 0.9 percent and the IMF projecting 0.8 percent. Taiwan, meanwhile, recently raised its 2025 growth outlook to 4.45 percent, while the IMF projects 2.9 percent.