South Korea has closed the economic gap with Japan as its per capita gross domestic product has neared the level of its neighbor, mainly due to the currency exchange rate in 2015, a report showed Tuesday.

Korea’s per capita GDP was estimated to stand at $27,226 in 2015, which reaches 84 percent of Japan’s $32,432, according to a report by Hyundai Research Institute.

This is the first time that the gap in per capita GDP between the two countries comes below 20 percent since the International Monetary Fund started collecting related data in 1981. Back then, Japan’s per capita GDP was five times that of Korea.

Experts attribute the current phenomenon to the weakening yen. Since Japanese Prime Minister Shinzo Abe took office in 2012, the yen has fallen from 79.79 yen to 121.02 yen last year. The yen’s rapid depreciation caused a fall in GDP per capita for the past three years.

“In addition to the currency factor, Korea’s nominal economic growth rate continued to remain higher than that of Japan,” said Joo Won, a senior researcher at HRI.

For Korea, the per capita GDP last year marked a 2.6 percent drop from $27,963 a year earlier. It was the first decline in six years since the financial crisis took a blow to the country’s economy in 2008 and the following year.

Based on separate data collected by the IMF, the country’s per capita GDP is expected to reach $36,750 in 2020, up 21.3 percent from 30,285 in 2017.
Japan, meanwhile, will see slower growth than Korea over the same period. Its per capita GDP is forecast to grow 10.6 percent to $38,174 by 2020 from $34,486 in 2017, according to estimates.

By Park Han-na (hnpark@heraldcorp.com)