NABO Global Economic Trends & Issues (No. 1)

Published on March 24, 2025
Published by Economic Analysis Coordination Division

■ Global Economic Trends: Gradual Recovery Amid Growing Uncertainty in Global Trade
   The global economy is gradually recovering, although uncertainty is intensifying due to the Trump 2.0 administration’s expansion of protectionist policies. Key real indicators, such as global trade and production, continue to mark modest improvements, while prices, after a period of decline, are now rising. At the same time, the Trump administration’s tariff policies and other measures are fueling anxiety in the global trade environment.
    International financial markets have recently shown mixed movements, reflecting the economic conditions of individual countries. In the bond market, U.S. and Eurozone government bond yields edged down in February compared to the previous month amid concerns over the Trump administration’s tariff policies. The U.S. stock market declined due to fears of an economic slowdown, while emerging market stocks rose on expectations of growth in China’s AI and semiconductor sectors. In the foreign exchange market, both the U.S. dollar and the Chinese yuan weakened slightly as trade conflicts heightened concerns over a global economic slowdown. Meanwhile, the commodity price index declined in February from the previous month, although price trends varied by item due to uncertainties surrounding U.S. tariff policies and other factors.
    The “Advanced Economy Trends” section observes that the U.S. economy continues to maintain relatively strong growth, while the Eurozone and Japan are experiencing diverging trends as their growth rates slow. The U.S. remains on a solid growth trajectory, but uncertainty has risen due to the Trump administration’s “America First” policies. Meanwhile, the Eurozone and Japan have seen stagnant growth, weighed down by weakness in manufacturing and goods exports.
    The “Emerging Economy Trends” section highlights that growth rates have varied by country—some emerging economies, such as India and Vietnam, have posted solid growth, while others, like China, continued to grow at a sluggish pace. Specifically, India and Vietnam have recorded high growth, driven by strong exports and increased investment. On the other hand, China’s production and exports have reported modest positive trends, but its consumption recovery has remained lackluster.

■ Issue Analysis: Comparing Long-Term Recession Risks in Major Economies Using the Japanification Score
    Recently, concerns over prolonged economic downturn have been mounting amid economic slowdowns in China, Germany, and other major economies. Korea has also shown signs of weak growth, raising concerns about extended stagnation. Against this backdrop, this Issue Analysis compared long-term low growth risks across major economies using the Japanification score and examined the factors driving regional and country-specific differences.
    The analysis found that Asian economies such as China, Thailand, and Hong Kong face relatively high risks of prolonged low growth. The key contributing factors include high private debt levels, declining asset prices, persistently low inflation, and weak potential output growth due to a shrinking working-age population.
    South Korea is no exception, as it is grappling with an increasing risk of long-term low growth, driven by deteriorating demographics, a private debt overhang, and weakening potential output growth. To mitigate these risks, it is essential for Korea to devise countermeasures aimed at bolstering future growth potential.