Korea to be the world's ninth largest economy

Korea will be the world's ninth largest economy by 2025 with its GDP expanding to $2.63 trillion, according to a report by Goldman Sachs, a global investment bank. Currently, Korea's GDP is $680 billion and 11th largest in the world.
The report also said that in the ranking of income per capita, Korea will be ranked the third after the United States and Japan by 2025 among 22 countries. Korea's income per capita is expected to soar to $52,000. By 2050, the income will reach $81,000.
Goldman Sachs presented the Global Economics Paper No 134, which included its prospects for a set of developing countries, a group it calls the N-1l (the next eleven). N-1l in-cludes Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.
"Of them, only Mexico and Perhaps Korea have the capaci-ty to become as important globally as the BRICs (Brazil, Russia, India and China)," the report said.
"By 2050, the largest economies in US dollar terms will look very different from today. China would become the largest economy, followed by the United States, India, Japan and Brazil." "Korea could overtake Italy and Canada."
The investment bank also forecast that in terms of income per capita, the picture will be slightly different. "By 2050, Korea's income per capita is higher than each of the G7, ex-cept for the United States," the report said.
It said that by 2025, the world's top 10 economies will be the United States, China, Japan, Germany, India, Britain, France, Russia, Korea and Italy.
In the Growth Environment Score (GES), Korea received 6.9 point, becoming the 17th among all countries. Korea ranked more highly than Britain, Japan, France and Italy.
"The GES also shows that some of the N-1l are quite Well-placed. Korea is the standout, highlighting how different it is to the rest of the group," according to the report. "Even given an optimistic view of the path for some of the better-placed members of the N-1l, the overall picture suggests that only Korea and Mexico are serious candidates that are both large enough and plausible enough to lay claim to a BRICs-like impact."
"Although Korea does not overtake the BRICs economies by 2050, it is more likely to achieve its potential based on its solid growth environment," Goldman Sachs said.
In the short-term, the Korean economy will face challenges of high interest rates and rising inflation. Secondly, the appreciation of Korean won against Japanese yen may hurt exports, which is Korea's single largest drive for the growth amid the prolonged consumption slump.
But the Goldman Sachs report was confident in the long term, saying that Korea has a unique opportunity in Asia to prosper and assume a greater role in global financial affairs. The only question is whether its leaders will sense it and turn that potential into reality, it said.
In its separate report on Asia-Pacific Economics Analyst released December 12, Goldman Sachs said it maintains Korea's GDP growth forecast of 5.3 percent in 2006, with domestic demand growth at a still higher 5.7 percent.