Vegetables are piled up at a stall in a nearly empty traditional market in Seoul, Nov. 5. Yonhap
Koreans do not think their actual income increased as steeply as the gross national income (GNI) per capita, which grew by 540 times from 1953 to 2023, according to data released Wednesday.
The data from the Bank of Korea (BOK) indicated that such a discrepancy in people's perception of income growth and GNI per capita is linked to personal gross disposable income (PGDI).
The GNI measures a nation's wealth by adding up its gross domestic product (GDP) and net income from abroad.
The PGDI is an indicator of a household's real purchasing power and ability to spend. It is the amount of money a person has left after taxes and other deductions.
For this reason, the PGDI has been regarded as a more convincing index of household income.
The BOK data showed Korea's GDP was 47.7 billion won in 1953, the year when the 1950-53 Korean War ended.
The war-stricken country underwent rapid industrialization afterward. By 2023, the GDP shot up to 2,401 trillion won ($1.67 trillion).
Concerning GNI per capita, it was a mere $67 in 1953. But it reached $36,194 in 2023, marking a whopping 540-times surge. When converted to an annual average, the growth rate stands at 9.4 percent.
The PGDI grew from $482 in 1975 to $19,498 in 2023. The annual increase rate was measured at 8 percent.
From 1976 to 2023, the yearly growth rate of real PGDI was 5 percent, remaining below that of real GNI at 6 percent.
In particular, real PGDI grew at 10.8 percent on average in the late 1970s but the pace of growth slowed down to 0.8 percent by the early 2020s.
"Simply put, the remarkable growth of the economy and income is not felt by the public as their actual available income increased at a slower pace," the Citizens' Coalition for Economic Justice (CCEJ) said.
The Seoul-based coalition said the public most recently witnessed the gap between economic growth and PGDI in the first quarter of the year.
It was when the country's GDP grew 1.3 percent from the previous quarter, marking the sharpest expansion since the fourth quarter of 2021 when the economy grew 1.4 percent.
But it was also when households were coping with high inflation and costly borrowing rates, and were forced to reduce spending.
The group pointed out that the public is a little encouraged by reports that Korea, for the first time in history, is posed to overtake Japan in GDP per capita this year.
According to the International Monetary Fund (IMF), Korea's GDP per capita this year is estimated to be $36,132 against Japan's $32,859.
The IMF forecast cites that Korea's GDP per capita will be $37,675 in 2025, surpassing Japan's $33,234.
"The data does not necessarily mean Koreans are better off in quality of life," the CCEJ said, noting that Japan's GDP per capita is relatively low due to the weaker yen to the U.S. dollar.