"US Economy to Remain a Global Growth Pillar Next Year... US-China Tensions Persist"

Korea National Diplomatic Academy '2024 International Outlook'
US to Support Global Economy Next Year... Growth Continues
Economic Improvement May Benefit Biden's Reelection
China's Economy Still Struggling... Needs New Growth Drivers

Domestic experts have analyzed that the unexpectedly strong U.S. economy this year will continue to maintain moderate growth next year, leading the global economic growth trend. This is expected to have a positive impact on the Korean economy, which is highly dependent on exports.

However, it is difficult to expect that the Chinese economy will regain its growth momentum soon, and the U.S.-China conflict, which heightens tensions in global trade, is likely to continue. Therefore, uncertainties surrounding the Korean economy are expected to persist next year as well.

"U.S. to be the Pillar of Global Economy Next Year"…Positive for Korea

The Korea National Diplomatic Academy recently stated in its outlook for next year's international situation that "the U.S. economy is expected to continue moderate growth in 2024 and serve as a pillar of global economic growth," explaining that "this optimistic outlook is based on the possibility of a soft landing for the U.S. economy, supported by robust expansion of personal consumption within the U.S."

Professor Min Jeong-hoon of the Korea National Diplomatic Academy explained at a related briefing held yesterday at the Government Seoul Office Complex, "Looking at the shopping during this holiday season, consumers opened their wallets more than expected," adding, "Since the real economy is also performing well, there is a possibility that the U.S. economy will prosper in the first half of next year."

According to the Mastercard SpendingPulse report, retail sales excluding automobiles during the year-end Thanksgiving and Christmas period, which are major consumption seasons in the U.S., increased by 3.1% compared to the same period last year.

If the U.S. economy continues to grow, it is expected to have a positive effect on the Korean economy as well. This year, the Korean economy faltered significantly due to high interest rates, a downturn in the semiconductor market, and a slowdown in China's growth, but thanks to the U.S. economic boom, exports such as automobiles to the U.S. increased, allowing Korea to maintain a surplus trend.

Lee Chang-yong, Governor of the Bank of Korea, said at a press conference on the 30th of last month, "Last year, we were troubled by the exchange rate impact due to the strong U.S. economy," but added, "Now, rather, the high U.S. growth rate is good for our exports, so we hope the U.S. economy achieves a soft landing."

Next Year’s U.S. Economy Could Shake 'Presidential Election and Korea-U.S. Relations'

The reason why the U.S. economic situation next year is particularly important is that it will significantly influence the outcome of the U.S. presidential election in November. Depending on whether the current leading candidates, President Joe Biden or former President Donald Trump, win, there will inevitably be considerable repercussions for the Korean economy as well as Korea-U.S. and U.S.-China relations.

Currently, President Biden's approval ratings are lower than former President Trump's due to high inflation in the U.S. and the Israel-Hamas war, but the Korea National Diplomatic Academy explains that if the war enters a concluding phase next year and U.S. inflation and economic conditions improve, the situation could change.

Professor Min said, "Approval ratings are greatly influenced by economic conditions, so the U.S. economy in the first and second quarters of next year is very important," adding, "If the U.S. economic situation is positive in the first half of next year, a different scenario from now could form. The outcome will depend on how positively voters perceive Biden's policies."

If the U.S. economy continues to grow and President Biden is re-elected, economic and political relations similar to the current ones may continue. However, if President Trump wins, there could be changes in Korea-U.S. trade and the Korea-U.S.-Japan cooperation framework.

Professor Min, while assuming that the importance of Korea-U.S. cooperation will not change even under a Trump administration, said, "If former President Trump is elected, minimizing waste of national power and maximizing U.S. interests in trade will become more explicit," adding, "Risks may continue in terms of defense cost-sharing, economy, and message management."

Chinese Economy Still Struggling… U.S.-China Conflict to Continue

The Chinese economy, which has held the position as South Korea's largest export market for the past 20 years, is expected to face difficulties again next year. The real estate sector continues to be sluggish, and efforts to find new core growth drivers have been sluggish. This is a negative factor for the Korean economy, which is highly dependent on exports to China.

Professor Kim Han-kwon of the Korea National Diplomatic Academy said, "Next year, China will continue efforts to stably manage the economic instability factors highlighted this year while further strengthening party-centered management," pointing out, "China needs to find growth momentum, but it is not easy under the current U.S. pressure."

Professor Choi Jin-baek of the China Diplomacy Center at the Korea National Diplomatic Academy said, "For China to create growth momentum, structural reform efforts are necessary, but under President Xi Jinping's one-man leadership, this is becoming more difficult, which could reinforce China's long-term low-growth trend," adding, "If this is perceived skeptically by the Chinese people, it could become a dangerous moment."

The U.S.-China hegemonic conflict, which accelerates the fragmentation of global trade and burdens the Korean economy, is also expected to continue next year.

According to a report released by the Bank of Korea yesterday, if the U.S. and China strengthen trade barriers between their respective blocs and implement protectionist measures, South Korea's exports could decrease by up to 10%, and global exports by around 4%.

The Korea National Diplomatic Academy stated, "Next year, the U.S. will continue managed competition with China," adding, "There is unlikely to be a fundamental change in U.S. policy toward China because anti-China sentiment is very high within the U.S., and both the Biden administration and Trump candidate will have to maintain a tough stance on China."

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