Taiwan Passes South Korea in GDP Per Capita After 22 Years as AI Exports Surge

A reversal driven by chips, exports and currencies

Taiwan is estimated to have overtaken South Korea in gross domestic product per person in 2025, ending a 22 year period in which South Korea held the lead. Taiwan's statistics agency projects GDP per capita of $38,748, compared with South Korea's estimated $36,107, as demand for artificial intelligence chips lifts Taiwan's exports and a weaker Korean won reduces the dollar value of South Korea's economy.

As of January 13, 2026, figures attributed to South Korea's Ministry of Economy and Finance and the Bank of Korea put the country's nominal GDP for 2025 at $1.87 trillion. Measured in dollars, that would represent a contraction of 0.5 percent from 2024. Its estimated GDP per capita fell by $116 from the previous year.

The International Monetary Fund's World Economic Outlook also projects a reversal in the rankings. South Korea is expected to fall from 34th globally in GDP per capita in 2024 to 37th in 2025, while Taiwan rises from 38th to 35th. The change would put Taiwan ahead for the first time since 2003.

The statistics agency and Korean estimates place the gap at $2,641 per person. Other estimates put Taiwan at approximately $38,066 and South Korea at $37,430, a smaller gap of $636; the basis for those alternative figures was not specified. Both sets put Taiwan ahead, while the exact size of the lead depends on the estimates used.

GDP measures the value of goods and services produced in an economy. Dividing that total by the population gives GDP per capita, an average measure of economic output per person. Here, the comparison is in US dollars, making both economic production and exchange rates central to the result.

Taiwan closes the export gap

Taiwan's exports reached a record $640.7 billion in 2025, rising 34.9 percent from the previous year. South Korea also recorded its highest export total, at $709.7 billion, but its increase was much smaller.

Taiwan added $165.8 billion in exports over the year, compared with South Korea's increase of $26.1 billion. Taiwan's annual gain was therefore more than six times South Korea's, showing how quickly its export businesses expanded during the surge in demand for advanced technology.

Taiwan's exports rose to 90.3 percent of South Korea's total, up from 69.5 percent a year earlier. South Korea still exported more in absolute terms, but Taiwan narrowed the distance sharply in a single year.

Taiwan's economy is about half the size of South Korea's. Exports approaching South Korea's total therefore carry particular weight for Taiwan's economic performance. The comparison brings together two parts of the story: South Korea retains the larger economy, while Taiwan is experiencing faster expansion in the industries selling goods abroad.

Why artificial intelligence is lifting Taiwan

Taiwan Semiconductor Manufacturing Company, or TSMC, sits at the centre of Taiwan's growth. The world's largest contract chipmaker produces chips for other companies, and Taiwan's strength in this foundry business has become a major driver of its export surge.

Artificial intelligence services require advanced chips and substantial computing capacity. The global rush to develop those services has generated strong demand for the products Taiwan manufactures, connecting investment in AI directly with the island's factories and technology businesses.

US technology companies Nvidia, AMD and Amazon are pouring billions into Taiwan and establishing research centres and data facilities. Their investment adds to the activity surrounding the local technology industry, alongside the demand for chips.

Analysts forecast Taiwan's real GDP growth at around 7.4 percent for 2025. Real growth measures changes in production after allowing for price changes, making it different from the dollar value used in the GDP per capita ranking. Major global investment banks expect growth to average around 4 percent in 2026 despite a possible slowdown, compared with South Korea's projected rate of roughly 2 percent.

Several changes helped Taiwan build momentum

Gordon Sun, director of the Taiwan Institute of Economic Research, identified several developments behind Taiwan's recent performance. These include shifts in supply chains caused by trade tensions, faster adoption of digital technology during the pandemic, and continuing growth in demand for high performance computing and AI.

Supply chains are the networks through which companies obtain components, manufacture products and deliver them to customers. Changes in those networks have benefited Taiwan, while the expansion of digital services has increased the need for computing equipment.

Taiwan's recent acceleration therefore reflects more than the latest wave of AI investment. Sun's explanation connects that demand with earlier changes in where companies organise production and how businesses use technology. The semiconductor industry has been positioned to benefit from several changes arriving in succession.

South Korea's growth loses speed

South Korea's real GDP growth has remained below 3 percent for four consecutive years. Growth likely slowed to just 1 percent in 2025, which would be its weakest performance since the contraction caused by the pandemic in 2020.

Domestic consumption has also been slow to recover. Paik Seok-hyun, an economist at Shinhan Bank, identified that delay as one factor affecting the economy, while pointing to depreciation of the won as a major reason for the decline in GDP measured in dollars.

South Korea faces longer lasting pressures from a rapidly ageing population and one of the world's lowest fertility rates. A shrinking workforce threatens the economy's capacity to produce goods and services over time.

Its established industries, including automobiles, ships and memory chips, also face global trade volatility and technological stagnation. Political uncertainty and external risks, including US tariff policies, add to the uncertainty surrounding exports. Analysts point to the lack of rapid structural reforms addressing demographic and industrial challenges as another disadvantage compared with Taiwan's concentrated technology momentum.

South Korea nevertheless retains substantial industrial strengths and a highly skilled workforce. Its record export total in 2025 sits alongside slower growth, illustrating that a country can sell more goods abroad while still facing weakness elsewhere in its economy.

How the weaker won changes the comparison

The Korean won's average exchange rate weakened by 4.3 percent in 2025 compared with 2024. When an economy's output is converted from its own currency into dollars, a weaker currency lowers the resulting dollar figure.

South Korea's GDP measured in won rose nearly 29 percent between 2021 and the period covered by the latest estimates. Over the same period, GDP measured in dollars increased by only 7 percent. The difference shows how currency movements can reduce the apparent size of economic gains in an international comparison.

Taiwan's currency, the New Taiwan dollar, depreciated more slowly than the Korean won and Japanese yen. That relative stability helped preserve the dollar value of Taiwan's output while its export industries expanded.

The won's sustained weakness also raises the local cost of imported raw materials for South Korean producers. Higher input costs can erode the price competitiveness of their products. Currency movements therefore affect both the statistical comparison and the costs businesses face.

Paik's assessment places the exchange rate near the centre of South Korea's falling dollar GDP figures. The country faces a combination of slower economic growth, delayed recovery in consumption and a currency conversion that reduces the value of its output in dollars.

When could each economy reach $40,000?

Taiwan's National Statistics of the Republic of China projects GDP per capita of $40,921 in 2026. That would take Taiwan beyond the symbolic $40,000 threshold before South Korea. Some forecasts also expect Taiwan to reach the $50,000 range by 2030.

South Korea is expected to reach $40,000 later, potentially around 2028 or beyond if the won remains weak. The IMF had initially forecast that South Korea would reach the milestone in 2027, but subsequently pushed the expected timing back.

Park Jung-woo, an economist at Nomura Securities, estimates South Korea's potential economic growth at below 2 percent, compared with more than 3 percent for Taiwan. Potential growth refers to the pace an economy can sustain through its productive capacity, rather than a temporary jump in activity.

Those estimates point to a gap that could widen if Taiwan maintains faster growth. The projected dollar milestones also remain sensitive to exchange rates, the same factor that has already reduced South Korea's position in the comparison.

The dates behind the reversal

The change in position developed over several years, although the sharp difference in export growth during 2025 brought it into focus. The key dates connect the previous ranking, the currency effect and the next projected milestones.

• 2003: The last year Taiwan was ahead of South Korea in GDP per capita before the current estimated reversal.
• 2021 to the latest estimates: South Korea's GDP rose nearly 29 percent in won but only 7 percent in dollars.
• 2024: The IMF placed South Korea 34th and Taiwan 38th globally in GDP per capita.
• 2025: Taiwan's exports reached $640.7 billion, and estimates put its GDP per capita above South Korea's.
• January 13, 2026: The comparison rests on estimates and projections for 2025, alongside forecasts for subsequent years.
• 2026: Taiwan's statistics agency projects GDP per capita of $40,921.
• 2028 or later: South Korea could reach $40,000, following a delay from the IMF's earlier expectation of 2027.
• 2030: Some forecasts place Taiwan's GDP per capita in the $50,000 range.

Taiwan's near term growth is expected to slow from its estimated pace in 2025, yet the forecasts still place it ahead of South Korea. The projected reversal is therefore accompanied by expectations of continued differences in growth, rather than a return immediately to the previous ranking.

GDP per person and wages tell different stories

Average wages in South Korea and Japan remain higher than in Taiwan despite Taiwan's estimated lead in GDP per capita. Economic output and employee compensation measure different things: one averages production across the population, while the other concerns what workers are paid.

Nick Marro of the Economist Intelligence Unit pointed out that compensation in Taiwan remains relatively low compared with the rest of the region. That matters for Taiwan's ability to attract and retain international talent, even as its technology sector grows rapidly.

Residents in Taiwan have also noted that the semiconductor boom's benefits may be uneven. Some observers say the service sector and average wages have failed to keep pace with inflation, contributing to a sense of imbalanced development.

GDP per capita averages output across an entire population, while income inequality and local living costs shape individual experience. Inflation matters because rising prices can reduce what a wage buys, even during a period when the wider economy is expanding.

South Korea has roughly 51.7 million people, compared with Taiwan's 23.4 million, giving it more than twice Taiwan's population. Its nominal GDP remains nearly twice Taiwan's total. In the per capita calculation, South Korea's larger output is divided among a much larger number of people, while Taiwan combines a smaller population with strong export growth.

What South Korea could learn from Taiwan

Joo Won, deputy director of economic research at the Hyundai Research Institute, urged South Korea to examine the policies and investment decisions behind Taiwan's momentum. His assessment also gave substantial weight to the weaker won and the semiconductor industry's effect on the figures.

The reversal in per capita GDP largely reflects the weaker won and some distortion linked to semiconductors, so it does not require an overly pessimistic interpretation. Still, Korea needs to closely examine the policy support and corporate investment strategies behind Taiwan's recent momentum and consider how to benchmark them.

Taiwan's experience brings attention to the value of a strong position in the technology supply chain when global demand rises rapidly. South Korea's experience shows the pressure created when slower growth coincides with currency weakness, demographic change and uncertainty in major export industries.

The comparison leaves both economies with practical concerns. Taiwan faces uneven gains across industries and relatively low compensation, while South Korea faces the task of restoring stronger growth and addressing pressures on its workforce and businesses. Their different challenges help explain why the GDP ranking and everyday prosperity can move at different speeds.

The Bottom Line

• Taiwan is estimated to have passed South Korea in GDP per capita in 2025 for the first time since 2003.
• The main estimates put Taiwan at $38,748 and South Korea at $36,107; alternative estimates also place Taiwan ahead.
• Taiwan's exports rose 34.9 percent to $640.7 billion, reaching 90.3 percent of South Korea's $709.7 billion total.
• AI demand and Taiwan's semiconductor industry drove growth, while South Korea faced slower expansion and a weaker won.
• The won's average exchange rate weakened by 4.3 percent in 2025, reducing South Korea's GDP when measured in dollars.
• Taiwan is projected to reach $40,921 per person in 2026; South Korea could reach $40,000 around 2028 or later.
• Average wages remain higher in South Korea and Japan than in Taiwan, despite Taiwan's GDP per capita lead.