The Bank of Korea predicted that the global economy will grow further into the second half of this year thanks to the commercialization of the Corona 19 vaccine and the expansion of fiscal spending by the new US government.
However, he cited as a negative factor that the imbalance in the flow of improvement between countries and between classes and industries within the country could become severe.
It also analyzed that there are significant variables that will affect the global economic flow, such as the delay in the end of the pandemic (infectious disease pandemic) and the US-China conflict.
Corona 19, Bidnomics (US new government economic policy), and China’s growth strategy were placed in the forefront of the ‘7 issues that will determine the direction of the global economy in 2021′, compiled by the BOK through’Overseas Economy Focus’.
1.Commercialization of COVID-19 vaccine
Vaccination is starting in major countries, so the time to commercialize the vaccine is expected to come sooner than expected.
Considering the vaccine supply plan, it is expected that population immunity will be approaching in the second half of 2021, especially in developed countries, but the feeling of vaccination rejection and the possibility of delaying the release of some vaccines may act as a limiting factor for the end of the corona.
2. Bidnomics in earnest
After the inauguration of the new biden government, bidenomics, which focus on increasing fiscal expenditure, increasing taxation, multilateralism and eco-friendliness, are expected to be promoted in earnest.
Large-scale fiscal expenditures, infrastructure (infrastructure) investments, and easing of uncertainties in the global trade environment are expected to have a positive impact on the global economy as a whole.
3. Transformation of China’s growth strategy
It is expected that the existing export-oriented growth paradigm will be shifted by leveraging the potential of the huge domestic market according to the’bicycle growth strategy’.
China’s participation in the global supply chain is likely to be reduced due to the bicyclic policy, but its potential as a global consumer market is expected to expand.
4. Intensifying global hegemony competition
Conflict between the United States and China may prolong as the US policy toward China shifts to a method of checks based on principles.
Uncertainty in US foreign policy will be eased, but public checks on the US will intensify, and the negative impact of the hegemony competition is likely to widen.
5. Potential intensifying economic imbalance and political conflict in Europe
With the Corona 19 incident, the disparity is growing as the economic power gap between Northern Europe such as Germany and Southern Europe such as Italy and Spain is widening.
Accordingly, there is a high possibility that economic and political conflicts between member countries will spread. Conflict may increase, centering on issues with large differences of opinion among member states such as refugee issues and climate change.
6. Global economic recovery imbalance
Depending on the time of supply of vaccines and financial capacity, economic improvement among countries appears differently, and as the impact of Corona 19 is concentrated in the service industry and low-income groups, the differentiation between national sectors is also clear.
Developed countries have improved rapidly thanks to large-scale policy support, while emerging countries are showing a slow recovery due to poor health conditions and lack of financial resources.
The widening of the imbalance between advanced and emerging countries is likely to limit the recovery of the global economy, and the corona shock will stagnate due to the deepening of the imbalance between classes and industries within the country.
Despite the sluggish real economy, the real-financial gap is widening, with asset prices such as stock prices rebounding rapidly.
7. Strengthening international response efforts in relation to climate change
As the new climate system (2021~) is inaugurated and the new government of Biden is expected to change the stance of climate change-related policies in the United States, the international community’s response to environmental regulations and investment expansion is expected to further strengthen.
As each government expands investment in eco-friendly technologies, competition for preoccupying new industries and markets is expected to intensify and development of eco-friendly technologies is expected to be promoted.
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