A potential trade tussle between the US and China will have the South Korean economy suffer a decline in its growth rate due to its higher trade dependency on the neighbor, a report said Monday.
"Having subsided after the global financial crisis, trade protectionism is once again gaining momentum, raising concerns over the negative impact on the highly trade-dependent Korean economy," the report said released by the state-run Korea Development Institution.
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(Yonhap) |
The report cited that the number of new trade barriers worldwide rose to 217 in 2015 from 130 tallied in 2011, with Washington-imposed restrictions marking 23 in 2015, sharply up from eight in 2011.
Trade protectionism has been making headlines in recent months as US President Donald Trump has expressed the "America First" doctrine.
Also, Trump targeted China, which enjoyed more than $300 billion worth of trade surplus with the US last year, giving hints at raising trade barriers against the world's second-largest economy.
"Trade disputes between China and the US generally have a negative impact on Korea, and US trade restrictions on China affect the Korean economy more than vice versa," the KDI report said.
"Given that China depends more on the US than the other way around, it is mostly the decrease in China's domestic demand caused by US trade barriers that will negatively impact the Korean economy."
It noted that a 10 percent drop in China's exports to the US due to Washington's trade restrictions is expected to lead to an 0.31 percent cut in South Korea's gross domestic product.
Meanwhile, South Korea will see its GDP fall 0.4 percent following Beijing's restrictions on US exports.
However, the KDI report said such a decrease in the country's GDP is not a "serious crisis," saying "Korea should take the necessary actions." (Yonhap)
