[IPR Forum] "Structural Long-Term Recession Accelerates After COVID-19"

Dongmin Lim, Economist at Kyobo Securities

Lim Dong-min, an economist at Kyobo Securities, is giving a lecture on the theme of "The New Economy of the 21st Century and the Future of Finance" at the "2022 Asia Economy IPR Forum" held on the 8th at the Bankers Hall in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Hyungsoo Park] Economist Lim Dong-min of Kyobo Securities spoke as a lecturer at the '2022 Asia Economy IPR Forum' held on the 8th at the International Conference Hall on the 2nd floor of the Bankers' Hall in Jung-gu, Seoul, stating, "We are focusing on the possibility of a structural long-term recession and the growth of the digital economy after the COVID-19 crisis."

He said, "From the perspective of an economist analyzing the real economy and financial markets, the global economy is under pressure from a structural long-term recession, which means a chronic downturn," and predicted, "In the future, the decline in potential growth rate and actual growth rate will become more pronounced."

A structural long-term recession refers to a phenomenon where the global economy enters a structural and prolonged downturn, leading to decreases in corporate investment and employment, household income and consumption, and a deepening of wealth inequality.

He added, "Since the 2008 financial crisis, the phenomenon of structural long-term recession has intensified," expressing concern that "the structural long-term recession pressure has increased further due to the COVID-19 pandemic."

He analyzed, "Along with geopolitical instability, disruptions and bottlenecks in the global supply chains built in the 20th century have caused inflation, leading to a rise in the short-term neutral interest rate."

Although the long-term natural interest rate is declining due to the structural long-term recession, the short-term neutral interest rate is rising in the short term because of inflation. Economist Lim said, "Changes will occur in the traditional financial structure due to the inversion of short- and long-term interest rates," adding, "Since global public debt has rapidly increased, rising interest rates also increase risk factors."

He also introduced the digital economy and network value. Economist Lim Dong-min explained, "Huge platforms such as Apple, Microsoft, Amazon, Google, Facebook, Netflix, Alibaba, and Tencent, as well as sharing economy platform businesses like Airbnb, Uber, Lyft, and Pinterest, have emerged."

He expressed expectations, saying, "In the future, things will be able to connect with other things, and information with other information," and "a digital transformation creating a new value ecosystem will take place."

Since Apple launched the iPhone in 2007, changes have appeared in the group of top market capitalization companies on the U.S. stock market. Economist Lim introduced that contactless-related companies have risen with the COVID-19 pandemic.

He explained, "The digital native generation born after the 1990s is emerging as the main players in the economy," and "the attitudes of the digital native generation toward online and mobility, and furthermore their economic activities and lifestyles, will be completely different from previous generations."

Furthermore, he predicted, "The future of finance is similar," stating, "While traditional financial institutions continue to adopt digital transformation through fintech trends, big tech finance, where tech companies introduce financial services, will have a significant impact on the future financial landscape."

Economist Lim emphasized, "The scope of companies is expanding from physical markets and spaces to digital and transnational areas," and "companies will pursue value maximization that encompasses the coexistence of new stakeholders such as environment, society, and governance."

He explained, "The focus of corporate management and financial investment is moving beyond financial performance to creating inclusive and expansive values, aiming to build a sustainable ecosystem, which is an autonomous movement of the market economy and capital markets."

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