Is Korea Among the World`s Top 10 Economies?

Is Korea one of the world’s 10 largest economies? Renowned economic experts and leading Korean officials frequently say so, though the answer is no.

In his opening address June 22 at the World Bank’s ABCDE Conference, Strategy and Finance Minister Yoon Jeung-hyun said the country is among the world’s top 10 economies.

A day later, President Lee Myung-bak at the World Korean Community Leaders Convention said in a congratulatory speech, “Korea, which was one of the world’s poorest nations, has grown into one of the world’s 10 largest economies.”

The truth is, however, that Korea is not one of the world’s 10 biggest economies. The closest it got was 11th in 2002 and 2003. Since then, it has continuously been outpaced by emerging nations and fell to 15th last year.

The World Bank released statistical data on the economies and national income of 186 countries yesterday. Korea’s nominal GDP was 929.1 billion U.S. dollars last year for 15th place. GDP fell several notches to 14th last year, as India overtook Korea in 2004, Brazil in 2005, and Russia in 2006.

Australia last year also overtook Korea.

What explains Korea’s fall in the rankings is the sharp drop in the economic growth rate last year. In the wake of the global financial crisis, the rate fell from 5.1 percent in 2007 to 2.2 percent last year.

Worse, the economy contracted at the world’s fastest pace last year, declining 5.1 percent in the fourth quarter from the third.

Foreign exchange rates and growing inflation have also affected Korea’s poor performance. Kwon Sun-woo, head of macroeconomic research at Samsung Economic Research Institute, said, “The World Bank’s statistical data is based on the U.S. dollar. That means a decline in the won-U.S. dollar rate results in a fall in dollar-denominated GDP.”

The won fell 26.1 percent against the U.S. dollar from late 2007 to December last year, far higher than the Australian dollar’s depreciation of 9.6 percent against the greenback over the same period.

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