The Bank of Korea: "Global Supply Chain Restructuring Should Be Seen as an Opportunity for Industrial Restructuring"

The Bank of Korea pointed out that with the global supply chain restructuring, inflationary pressures are expected to increase in the future, potentially expanding the conflicting relationship between inflation and the economy, and that in the mid to long term, it could also affect South Korea's growth potential.

On the 7th, the Bank of Korea stated in its report titled 'Future Global Supply Chain Risks and Implications' that "Global supply disruptions caused by prolonged COVID-19 quarantine measures and the Russia-Ukraine war are acting as factors that increase inflation risks in major countries and constrain economic activities."

The Bank of Korea explained that in the medium term, fragmentation due to U.S.-China conflicts and geopolitical tensions could expand global supply chain risks. In particular, since the pandemic, protectionism has strengthened, the importance of technology from a security perspective has increased, and the Ukraine war has further intensified fragmentation trends.

In South Korea's case, since exports of key items are mainly concentrated in the United States and China, and dependence on imports of major raw materials is also high, the impact could be relatively significant if these risks materialize.

The Bank of Korea emphasized that changes in the global supply chain require new perspectives and responses across the macroeconomy and industries.

The Bank of Korea explained, "From an industrial perspective, it is necessary to utilize this as an opportunity to promote structural adjustments that were delayed due to the China special demand, while strengthening the resilience of supply chains through geographic and product diversification."

It added, "Since recent fragmentation involves not only economic but also diplomatic and security factors, it is necessary for the public and private sectors to cooperate to establish a joint response system and actively participate in global discussions on new technologies and climate change responses."