Global Growth and Trade Assessment Report After the Pandemic
As the global IT market rebounds centered on semiconductors, there is a forecast that South Korea's economic growth will also expand this year.
According to the report titled 'BOK Issue Note: Evaluation and Implications of Global Growth and Trade after the Pandemic' published by the Bank of Korea on the 18th, South Korea's economy is expected to expand its growth mainly through exports and facility investments, driven by the IT market rebound this year.
The report anticipated that the previously delayed replacement demand for PCs and smartphones, as well as investments in AI (Artificial Intelligence) servers and data centers, will drive semiconductor demand. Facility investments are also expected to show a recovery trend, centered on the semiconductor, electric vehicle, and secondary battery sectors.
Furthermore, the improvement in exports this year is attributed to advanced countries such as the United States promoting industrial policies for advanced industries and eco-friendly investments, along with the recovery of global investments that had been deferred due to high interest rates.
Advanced countries including the United States are actively promoting industrial policies (such as CHIPS, IRA) to secure supply chain stability and leadership in advanced industry sectors, which is expected to support the recovery trend of global investments that had been below the post-pandemic trend.
The report emphasized that the import demand growth rate of South Korea's major export destinations is expected to rise significantly from -0.6% last year to 3.3% this year, supporting the outlook for export improvement.
Compared to global growth rates and global trade growth rates, which indicate global demand, the import demand growth rate of major export destinations considering their trade share with South Korea showed the highest correlation (0.84) with South Korea's exports.
Meanwhile, the report predicted that global trade will enter a moderate recovery phase this year. Although the recovery speed of trade was weak due to factors such as intensified fragmentation after the pandemic, monetary tightening, and service-centered recovery, it is forecasted that trade will improve this year as risks related to monetary tightening and service-centered recovery ease.
However, considering the ongoing global fragmentation, recent instability in the Middle East, and sluggish economic indicators in China, the trade growth rate this year (IMF forecast 3.5%) is expected to fall short of the long-term average (3.8% from 2007 to 2018).
In particular, if conflicts intensify mainly in the Middle East region, it is analyzed that negative impacts on global trade as well as South Korea cannot be avoided.
Park Se-jun, Deputy Head of the Research General Team at the Bank of Korea's Research Department, said, "Concerns about conflicts in the Middle East are not yet significantly reflected in the trade sector," but added, "Depending on how Middle East risks develop in the future, they could have negative impacts."
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