Kim Yong-beom, Vice Minister, "Demographic Changes and De-globalization Will Cause Major Shifts in Macroeconomics"

"Another Game Changer is the Climate Crisis and Carbon Neutrality Trend"
"Beware of the Green Swan, Not the Black Swan"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Kim Yong-beom, the 1st Vice Minister of the Ministry of Economy and Finance, emphasized that changes in population structure and deglobalization will bring about significant tectonic shifts in the macroeconomy and asset markets in the long term. He also pointed to the climate crisis and carbon neutrality as another 'game changer.'

On the 21st, Vice Minister Kim referred to a column by Martin Wolf, chief commentator of the Financial Times, warning of the inflation era, and introduced the views of Charles Goodhart, on which the column was based. He said, "In an era where negative interest rates and deflation concerns are widespread and Modern Monetary Theory (MMT) is gaining attention, the warning that the wolf of inflation is coming again may sound clich?d. However, Charles Goodhart, a widely respected scholar who wrote the new book (The Great Demographic Reversal) that forms the foundation of the column, argues that the wave of opening and globalization of China and Eastern Europe, which brought about a long-term decline in inflation since 1989, has now ended. Going forward, with population aging and low growth increasing the burden of debt, the world is entering an inflation era again after 40 years," he explained.

Regarding this forecast that prices could surge sharply in the short term, Vice Minister Kim said, "If such a scenario were to materialize, the international financial and asset markets could plunge into chaos where it would be impossible to foresee even a step ahead. It is a highly concerning issue." He added, "Although it is difficult to readily agree with the logic that savings propensity will decline faster than investment propensity, gradually causing a shortage of funds and a rise in real interest rates, the warnings from Charles Goodhart and Martin Wolf that the future may not be a simple extension of the present (where interest rates and prices trend downward) should be heeded."

He further wrote, "As pointed out in the column, changes in population structure and deglobalization are key factors that will bring about significant tectonic shifts in the macroeconomy and asset markets, including prices, in the long term."

Vice Minister Kim also mentioned the climate crisis and carbon neutrality trends as 'another game changer.' He stated, "Charles Goodhart, in his new book, essentially talks about a black swan of a return to the 1970s-style inflation era. However, perhaps what we should be more wary of in the future may appear not as a black swan but as a green swan."

Earlier, on the 20th, he also mentioned the green swan at the '32nd Innovation Growth Strategy Review Meeting, Policy Review Meeting, and 5th Korean New Deal Review Meeting.' Vice Minister Kim emphasized, "Climate change can cause economic and financial crises and is a major issue in the international community, so it is called a 'green swan.' In our country’s industrial structure, which has high energy consumption, the effective way to respond to climate change is the transition to green energy."

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