Lee Ju-yeol "Thoroughly Prepared for US Presidential Election... Market Volatility May Increase" (Comprehensive)

Hyundai Economic Research Institute "Korean Economic Growth Rate to Increase by 0.1~0.4%p if Biden Elected"

[Image source=Yonhap News]

[Asia Economy Reporters Eunbyeol Kim, Jehun Yoo] With the U.S. presidential election just one day away, Lee Ju-yeol, Governor of the Bank of Korea, instructed employees to thoroughly prepare as volatility in the financial and foreign exchange markets may increase.

At the executive meeting on the 2nd, Governor Lee said, "Amid growing concerns over the resurgence of COVID-19 centered in Europe, volatility in domestic and international financial and foreign exchange markets may expand depending on the U.S. presidential election results," and instructed, "Please maintain heightened vigilance by closely monitoring market trends and, if necessary, promptly implement market stabilization measures."

Currently, polls show Democratic candidate Joe Biden leading. However, recently the gap with U.S. President Donald Trump has narrowed, especially in battleground states, making it difficult to predict the election outcome.

In particular, the Bank of Korea is most concerned about a situation where the winner is not clearly decided immediately after the election. In such a case, uncertainty would increase, causing market fluctuations and significant movements in the exchange rate.

The Bank of Korea plans to hold a "Situation Review Meeting" at 5 p.m. on the 4th, right after the U.S. election, chaired by Deputy Governor Lee Seung-heon. This meeting will review international financial market reactions related to the U.S. election results and assess the impact on the domestic economy and financial and foreign exchange markets.

Meanwhile, the Hyundai Research Institute evaluated in its economic weekly report published that day that Biden's victory could further boost South Korea's economic growth rate. The institute stated in the "Impact of the U.S. Presidential Election Results on the Korean Economy" report that "Compared to President Trump's re-election, Biden's victory appears to exert greater upward pressure on South Korea's economic growth rate."

The institute forecasted that if Biden wins, the total export growth rate would increase by an annual average of 0.6 to 2.2 percentage points, and the economic growth rate would face upward pressure of 0.1 to 0.4 percentage points. In the case of President Trump's re-election, the "Red Wave (Republican administration)," South Korea's total export growth rate is predicted to face a downward pressure of 0.4 percentage points annually, and the economic growth rate a downward pressure of 0.1 percentage points annually.

For South Korea, regardless of which candidate wins, it is expected that the weak dollar, low interest rate trend, and the U.S. side's trade deficit improvement policies will remain unchanged. However, the institute viewed that the stock market could be positively influenced by Trump's deregulation and corporate tax cuts, both domestically and internationally.

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

The institute stated, "If Biden wins, a more favorable environment for domestic exports and overall economic growth is expected," adding, "Since differences in the impact on both the U.S. and Korean economies are anticipated depending on the U.S. election results, it is necessary to prepare countermeasures to maximize positive effects and minimize negative impacts."

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