"US Presidential Election Biden Victory Slightly More Positive for South Korea's Economic Growth Rate"

If Trump Wins US Presidential Election, South Korea's Economic Growth Rate Faces 0.1%p Downward Pressure
If Biden Wins, 0.4%p Upward Pressure Expected

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] There is a view that the election of Democratic candidate Joe Biden in the U.S. presidential election to be held on the 3rd (local time) will be more positive for South Korea's economic growth rate.

In a report titled "The Impact of the U.S. Presidential Election Results on the Korean Economy," published on the 2nd by Hyundai Research Institute, it stated, "Compared to the re-election of President Donald Trump, the election of candidate Biden appears to increase the upward pressure on South Korea's economic growth rate."

Hyundai Research Institute first assumed the results of this U.S. presidential election as ▲Scenario 1 (Democrats control the presidency and the House, Republicans control the Senate), ▲Scenario 2 (Republicans control the presidency and the Senate, Democrats control the House), ▲Scenario 3 (Democrats control the presidency and both houses), and ▲Scenario 4 (Republicans control the presidency and both houses), and estimated the U.S. economic growth rate accordingly.

As a result, the "Blue Wave" scenario (Scenario 3), where Biden is elected president and the Democrats control both houses, was predicted to show the highest economic growth rate. Under this scenario, the U.S. economic growth rate next year is estimated to reach 4.2%. Hyundai Research Institute explained, "Aggressive fiscal spending by candidate Biden and the Democrats will rapidly improve the economic growth rate in the short term, and through global trade expansion and infrastructure investment, job creation and productivity improvement will lead to the highest growth."

The "Red Wave" scenario (Scenario 4), where President Trump is re-elected and the Republicans control both houses, was forecasted to show the lowest economic growth rate. Hyundai Research Institute noted, "President Trump's tax and fiscal spending policies are more passive than candidate Biden's," and predicted "the continuation of tensions due to maintaining trade policy stances will result in the lowest growth."

In South Korea's case, it is predicted that regardless of which candidate is elected, there will be no difference in the weak dollar, low interest rate trend, and the U.S. side's trade deficit improvement policies. However, Hyundai Research Institute viewed that in terms of stock prices, President Trump's deregulation and corporate tax cuts are likely to have a positive impact on domestic and international stock markets.

By industry, if President Trump is re-elected, traditional energy, steel, construction, IT, and finance sectors are expected to benefit, while if candidate Biden is elected, renewable energy, pharmaceuticals and bio, batteries, semiconductors, and electric vehicles sectors are expected to gain.

Regarding economic growth rate, Biden's election is estimated to be more positive compared to Trump's re-election. According to Hyundai Research Institute, under the Red Wave scenario, South Korea's total export growth rate is expected to face downward pressure of 0.4 percentage points annually, and economic growth rate a downward pressure of 0.1 percentage points annually. Conversely, under Biden's election, total export growth rate is projected to increase by 0.6 to 2.2 percentage points annually, and economic growth rate to rise by 0.1 to 0.4 percentage points.

Hyundai Research Institute stated, "If candidate Biden is elected, a more favorable environment for domestic exports and overall economic growth is expected," and added, "Since differences in the impact on both the U.S. and Korean economies are expected depending on the U.S. presidential election results, it is necessary to prepare countermeasures to maximize the positive effects and minimize the negative impacts that may arise."

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