Through News Plus this week, Korea Economic TV will deliver next year’s economic outlook, the challenges ahead of the Korean ship’s route, and experts’ suggestions for overcoming them. There are concerns that our economy will see a slowdown in export growth next year amid a delayed recovery in domestic demand, and uncertainty is expected to deepen as the Trump administration officially takes office in January. This is reporter Yoo Ju-an.
Following KDI, a government-funded research institute, lowering its forecast for Korea’s economic growth rate for next year from 2.1% to 2.0%, the IMF Korea Mission, which recently visited Korea, also predicted that the Korean economy will only grow by 2.0%, which is the potential growth rate, next year.
Global investment banks Citi, Barclays, and JP Morgan are presenting an even lower forecast of 1.8%. Exports, which have led the Korean economy, are expected to decline, while domestic demand recovery is also delayed.
Korea’s monthly export growth rate, which has consistently shown double-digit growth compared to the same period last year, slowed to single digits in September, and as a result, exports in the third quarter decreased by 0.4% compared to the second quarter.
If the Trump administration, which is gradually gaining strength, takes office, exports may decline further.
Scott Bessent, CEO of Key Square Group, and Howard Rutnick, CEO of Canter Fitzgerald, who were nominated by President-elect Trump as Secretary of the Treasury and Secretary of Commerce, come from Wall Street and are also hardline tariff advocates.
The Korea Institute for International Economic Policy estimated that if the U.S. government imposes a 20% universal tariff, Korea’s exports to the United States would decrease by $30.4 billion, and the Hyundai Research Institute estimated that global trade volume would decrease by up to 3.6% and Korea’s exports would decrease by up to 347 billion. It is expected that it will decrease by billions of dollars.
[인터뷰] Kim Jin-il, professor of economics at Korea University
“There has never been a case like this in the past in a U.S. election where the Republican Party controls the President, the Senate, the House of Representatives, and right now, the Supreme Court. (Since the inauguration of the Trump administration) Even if we anticipate the scenario in advance, we have no choice but to respond according to the situation. “In the midst of the conflict between the U.S. and China, companies and the government must work hard to do the latter, either getting caught in the situation and having the shrimp explode, or being slightly peeled and drinking the water that comes out.”
There are concerns that the domestic demand sector, where recovery is delayed, will also not be free from the impact of Trump’s administration.
Domestic demand indicators recorded positive numbers in August, but soon turned negative again in September, and the expression ‘signs of domestic demand recovery’ was omitted for the first time in six months in the latest economic trends (Green Book) for November published by the government in the middle of this month.
[인터뷰] Seok Byeong-hoon, Professor at Ewha Womans University
“Considering the exchange rate and prices, it seems that the Bank of Korea will slow down the rate of reduction of the base interest rate. Then, of course, this will inevitably slow down the rate of reduction in loan interest rates and deposit interest rates. Then, from the perspective of households, consumption expenditures will be reduced. Then, loan principal and interest rates will be slowed down. “There is no choice but to repay or hold more deposits than in the past, and when companies raise investment funds through loans, interest costs are higher than before, so investment naturally decreases.”
In a situation where it is pointed out that the trickle-down effect from strong exports to domestic demand is gradually disappearing, the sense of crisis that even exports may falter is making the outlook for our economy next year even more gloomy.
There are many voices calling for interest rate cuts and active fiscal policies to overcome the crisis, but it is analyzed that they are in a dilemma because they may conflict with household debt management and financial soundness goals.
This is Yoo Ju-an from Korea Economic TV.
Reporter Yoo Ju-an [email protected]
**Considering the potential for a trade war with the US, what specific policies can Korea implement to diversify its export markets and reduce its reliance on the US economy?** This question focuses on AoS (Areas of Strength) by asking for concrete policy suggestions and relates to the theme of diversifying Korea’s economy.
## World Today News Interview: Uncertain Shores – Navigating Korea’s Economic Future
**Introduction:**
Welcome to World Today News. Today, we delve into the looming economic challenges facing Korea in the coming year. With global uncertainty and a new US administration potentially disrupting trade, experts are predicting a slowdown. Joining us today are two distinguished economists to dissect the issues and explore possible solutions.
**Guest Introductions:**
* **Professor Kim Jin-il:** Professor of Economics at Korea University, specializing in international trade and economic forecasting.
* **Professor Seok Byeong-hoon:** Professor at Ewha Womans University, focusing on macroeconomic policy and domestic demand trends.
**Section 1: Global Headwinds – The Trump Factor**
* **Host:** Professor Kim, the article highlights the potential impact of the incoming Trump administration on Korea’s export-driven economy. How significant a threat do you perceive the proposed tariffs to be, and what strategic responses should Korea consider?
* **Host:** Professor Seok, beyond tariffs, what other potential ramifications could arise from a shift in US trade policy? How might these affect Korean businesses and consumers?
**Section 2: Domestic Concerns – A Sluggish Recovery**
* **Host:** Professor Seok, the article points to a delayed recovery in domestic demand. What factors are contributing to this sluggishness, and what measures could effectively stimulate consumer spending and investment?
* **Host:** Professor Kim, given the potential conflicts between stimulating the economy and managing household debt, how can Korea strike a balance between short-term growth and long-term financial stability?
**Section 3: Navigating the Uncertainty – Looking Ahead**
* **Host:** Professor Kim, the article mentions the “trickle-down effect” from exports to domestic demand potentially waning. What potential new avenues for economic growth could Korea explore in this evolving landscape?
* **Host:** Professor Seok, what advice would you give to Korean businesses and individuals navigating this period of heightened uncertainty?
**Conclusion**
* **Host:** Thank you both for your valuable insights. As we move into an economically volatile year, understanding the complexities of these challenges and exploring potential solutions will be crucial for Korea’s future prosperity.
This interview structure aims to:
* **Encourage in-depth discussion** by posing open-ended questions that delve beyond simple yes or no answers.
* **Present diverse viewpoints** by allowing each guest to share their expertise and perspectives on the issues.
* **Engage viewers/listeners** by structuring the conversation around thematic sections that highlight key aspects of the economic outlook.
