[Photo by Yonhap]
A Joe Biden presidency is raising hopes for normalization of the multilateral global order disrupted by U.S. unilateralism under President Donald Trump to bode well for trade-reliant Korea, although the hard-line stance on China will likely be maintained.
The Democratic leadership will restore relationship with the World Trade Organization and global trade pacts disrupted by Trump`s America-first policy, local institutions predicted.
On top of the U.S. shift toward multilateral trade, the new Biden leadership is likely to carry out bold expansionary fiscal and monetary policies to shore up America’s economy and put more emphasis on fighting climate change, according to a report by the Korea International Trade Association.
Korea Hyundai Research Institute said Biden’s return to multilateralism is likely to have a positive impact on Korea’s trade-dependent economy, with Biden’s proposed coronavirus stimulus package to be a boon for Korean exporters. The Democrat-controlled House endorsed a $2.2 trillion relief package while Biden pledged $3 trillion in stimulus spending.
A speedy U.S. recovery can fuel demand for Korean products. A 1 percentage point increase in the U.S. economy would bump up Korean exports by 2.1 percentage points and Korean gross domestic product growth by 0.4 percentage point, according to a study by Hyundai Research Institute. The private institute also forecast Biden’s win to help lift Korean export growth by 0.6-2.2 percentage points and GDP growth by 0.1-0.4 percentage point.
Biden’s plans for climate change are also raising hope for growth in eco-friendly sectors. The president-elect has vowed to spend more than $2 trillion over the next four years in expanding sustainable infrastructure, renewable energy and clean vehicles, which is likely to benefit Korean companies with strengths in hydrogen cars, secondary batteries and solar energy.
The trade conflict with China, however, won’t likely end. The Bank of Korea expected Biden to take a similarly hard-line stance against Beijing. Korea Development Institute also projected the U.S. to gradually move its production sites away from China to India, saying this would put pressure on Korea to also renegotiate relations with its largest trading partner China.
By Kim Hee-rae and Kim Hyo-jin
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