In the wake of continued economic uncertainty regarding US President Donald Trump, the possible abolishment of the five-year Korea-US FTA and political disputes with China, the United Nations Economic and Social Commission for Asia and the Pacific has predicted a “moderate” economic growth forecast for the Korean economy.
“As an export oriented economy (Korea), overall economic growth in past years has been clouded by prolonged weakness in global trade,” said ESCAP’s May 2017 report on the economic and social survey of the Asia-Pacific region.
“Forecasts are for growth to remain moderate at 2.5 - 2.7 percent in 2017 and 2018. The export outlook is fragile due to increased trade protectionism and trade-related disputes with China.”
ESCAP’s report includes data on 14 nations across the Asia-Pacific region including Korea, China, Japan, India, Turkey and Russia.
The UN’s report stated that although the recent economic expansion of countries in Asia and the Pacific region has been steady, it is still modest compared with past trends, citing prolonged weak external demand, rising trade protectionism and heightened global uncertainty as the main factors.
ESCAP estimates the average economic growth in developing Asia-Pacific region economies, including Korea, could be up to 1.2 percentage points slower this year if increased talks of trade protectionism continues to climb. As a result of tightened global trade barriers, exports to advanced markets have fallen by 15 percent, while exports to Asia-Pacific region countries decreased by 10 percent.
“The most significant risk is trade protectionism. Recent shifts in United States policy over trade, currency, immigration and other areas could have large potential impacts on the region (Asia-Pacific),” the report said.
According to recent data from the US Department of Commerce last weekend, Korea’s trade surplus with the United States dropped nearly 25 percent in the first quarter of this year, with its US trading partner ranking falling from No. 6 to No. 8.
The country has recorded the largest drop among America’s 10 major trading partners this year. Compared to last year’s first quarter, the country’s trade surplus with the US decreased by roughly $1.9 billion or 24.6 percent this year.
By Julie Jackson (email@example.com)