IMF "If U.S.-China trade conflict intensifies after U.S. presidential election, South Korea will be hit hard"

The International Monetary Fund (IMF) predicted that South Korea will be hit relatively harder if the U.S.-China trade conflict intensifies after the U.S. presidential election.

Asked about the impact on the South Korean economy after the U.S. presidential election, Thomas Helbling, the IMF's deputy Asia-Pacific director, said at a news conference on the Asia-Pacific economic outlook, "The growing trade conflict is a major downside risk for South Korea."

Helbling said South Korea is strongly tied to global supply chains and global markets and is heavily exposed to both the U.S. and China, but he observed that if trade conflicts increase, much will depend on details such as what the U.S. and China will take.

Reaffirming the IMF's announcement that South Korea's economic growth rate will fall to 2.2% next year from 2.5% this year, it said it showed stronger-than-expected growth in the external sector in the first half of this year but that domestic demand was relatively weak.

Weak domestic demand reflected weakening purchasing power due to global inflation, but this situation will soon change, he said, adding that he expected domestic demand to strengthen as the Bank of Korea began easing monetary policy and nominal wages and income increased.