Allen Sinai: "In the Biden Era, Stocks Will Rise Further... South Korean Economy to Grow 3.2% This Year"

World Economic Research Institute (IGE) Webinar on the 21st

"Financial-Real Economy Gap May Widen Further for a While"
"Dollar Could Fall 5-10% from Current Level by Year-End"

Allen Sinai, CEO of Decision Economics (above), and Jeon Kwang-woo, Chairman of the Institute for Global Economics (IGE), are discussing the U.S. and global economy this year during a webinar on the 21st.

[Asia Economy Reporter Kim Eunbyeol] Despite concerns about a 'bubble,' the strong performance of the stock markets in the United States and South Korea is expected to continue this year. The stock markets are not yet overvalued, and especially the South Korean economy is anticipated to grow further due to increased external exports and the strong recovery of the Chinese economy.

Alan Sinai, CEO of Decision Economics, which analyzes and forecasts the economy for U.S. companies, institutions, and government policymakers, stated at a webinar hosted by the Institute for Global Economics (IGE) on the 21st, "This year will be the year of vaccines, not the pandemic," forecasting that the global economic recovery and stock market strength will persist throughout this year.

Considering recent vaccine supply delays and concerns about a global stock market bubble, this is a somewhat optimistic view. Dr. Sinai, an authority on economic forecasting, projects real GDP growth rates this year of 4.7% for the U.S., 7% for China, 2.7% for Japan, and 3.2% for South Korea. These forecasts are even more positive than the 3.0% growth rate presented by the South Korean government and the Bank of Korea.

Regarding the disconnect between financial markets and the real economy, a topic since last year, he diagnosed that "it is difficult to view it as irrational and it may continue for some time." He pointed out that it is natural for financial markets, including stocks, to preemptively reflect the global economic expansion based on the widespread distribution of COVID-19 vaccines and the Biden administration's strong economic stimulus measures.

On the somewhat sharp rise in global interest rates, including U.S. Treasury yields, since the beginning of this year, he drew a line by saying, "It is not yet a situation to be concerned about." Although U.S. Treasury yields have risen and the dollar has rebounded, he viewed the recent U.S. dollar rebound as limited and suggested that dollar weakness could reemerge. He assessed that "the U.S. dollar could decline by about 5 to 10% from current levels by the end of the year."

Based on quantitative research results, Dr. Sinai evaluated that "considering the economic growth trend over the next 1 to 4 years, it is difficult to see the global stock markets, including those of the U.S. and South Korea, as currently overvalued."

He was particularly optimistic about the South Korean economy, expecting better growth over the next 12 months due to the strong recovery of the Chinese economy and increased external exports, and recommended increasing the weighting of Korean stocks. The Bank of Korea is expected to maintain the base interest rate at 0.5% until the end of the year.

Regarding policy changes since President Biden's inauguration, he stated that policies and alliances distorted and divided under the Trump administration will be reconciled again, and although U.S.-China tensions will continue, they will not escalate into a Cold War.

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