[COVID-19 Transformation] "Retreat of Globalization... Preparing for Changes in GVC"

Emergency Survey of 112 Experts from Various Fields
55.4% "Global Economy Shows U-Shaped Recovery"
31.2% "Shock Ends and Rebound Starts from Q4"

[Asia Economy Reporters Kwangho Lee and Chaeseok Moon] A total of 112 domestic economic experts from academia, research institutions, and industry identified the biggest change the global economy will face after the COVID-19 pandemic as the "retreat of globalization." In the rapidly changing external environment, the top priorities for the government were suggested as "preparing countermeasures in response to changes in the Global Value Chain (GVC)" and "strengthening international competitiveness through basic technology research and development (R&D)."

Asia Economy conducted an urgent survey from the 21st to the 23rd targeting 112 experts from various fields including politics, economy, and society to prepare a special series titled "The Era of Post-COVID Great Transformation."

In this survey, half of the respondents (50.0%) answered that the biggest change in the world economy after COVID-19 would be "protectionism (retreat of globalization)." This was followed by deepening income inequality and polarization (24.1%), and strengthening regional economic blocs (15.2%). There is a widespread perception that globalization, which has rapidly progressed over the past decades allowing free movement of people and goods, has made the world vulnerable to infectious diseases like COVID-19. Consequently, there is a strong expectation that protectionism will rise and anti-globalization movements will intensify after COVID-19. This survey result is interpreted as reflecting such perceptions.

Regarding the key tasks the government should prioritize in response to changing external conditions (multiple answers allowed), the largest number of respondents (40.8%) chose "preparing countermeasures in response to changes in the GVC." This was followed by "strengthening international competitiveness through basic technology R&D" (22.3%), "shifting away from export-centered policies to foster domestic demand and service industries" (9.5%), "strengthening internalization of core strategic materials" (9.0%), "reinforcing reshoring and corporate U-turn policies" (8.5%), and "accelerating bilateral and multilateral trade negotiations such as Free Trade Agreements (FTA), Regional Comprehensive Economic Partnership (RCEP), and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)" (5.7%). The survey results align with the view that structural reform of the Korean economy, which is a small open economy heavily dependent on exports, is inevitable.

Additionally, when asked about the most demanded industrial policy from the government, 27.6% selected "discovering and supporting innovative industries," followed by "employment and labor market reform" (25.8%) and "deregulation of corporations" (19.6%).

Regarding the extent of the economic impact of COVID-19 on the global economy, the majority (51.8%) viewed it as comparable to the 2008 financial crisis, while 23.2% considered it similar to the 1929 Great Depression.

Furthermore, the most common expectation (55.4%) was that the global economic recovery after COVID-19 would follow a U-shaped pattern (gradual recovery over 2-3 years). Experts who predicted a slow rebound in a Nike-shaped recovery and a long-term stagnation in an L-shaped recovery accounted for 24.1% and 9.8%, respectively.

Regarding the timing when the domestic economic shock will end and recovery will begin, 31.2% forecasted "the fourth quarter of this year." Notably, more than half expected it to be after next year. As for when the Korean economy will fully recover from the COVID-19 impact and return to the previous state, 42.3% predicted "within next year," and 40.5% expected "during 2022."

This content was produced with the assistance of AI translation services.