How is the Agitation Between US and North Korea Expected to Impact Global Economy

The tensions between US and North Korea has mounted after President Trump responded to the threats from North Korea’s leader Kim Jong Un, saying- "fire, fury, and frankly power, the likes of which this world has never seen before"The conflict between the two nations is aggravating, something that has not been witnessed in the last two decades. Assorted provocations from North Korea on missile launches and threats on experiments of nuclear weapons have contributed to build up the conflict.Many analysts and academics have started serious discussions on a physical engagement between the two nations.The nuclear or conventional conflicts would result in a disastrous loss of life and a widespread economic turmoil that is most likely to be a major international dispute.It is being said that since the end of the World War II, this would be the first time the use of nuclear weapons and the impacts would be worldwide.The eventual impacts on the economy, either on a local or a global scale and all other possible scenarios have been assembled by the researchers at Oxford Economics, who have stated their thoughts in a handy table.The pressure of the resulting economic shock would be mainly borne by the Korean Peninsula, but many of the other countries will also be adversely affected. It would be widespread worldwide, affecting supply chains. Most hard hit will be the South Korean export items such as- liquid crystals, semiconductors, automotive manufacturers and shipbuilding spares. The overall export curve is expected to undergo a sharp decline.  "The market impact is significant. Equities fall sharply in the region, accompanied by abrupt exchange rate and bond market adjustments," Oxford Economics' head of macro scenarios, Jamie Thompson, and economist Oliver Salmon wrote."While market prices generally rebound swiftly with the resolution of conflict, the impact on activity is more persistent," they added."Growth remains subdued in 2018 and 2019 — and not only for countries at the centre of the geopolitical tensions. Overall, global growth slows significantly, to an annual rate 0.4pp below baseline over this period, with emerging markets recording even larger undershoots."
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How is the Agitation Between US and North Korea Expected to Impact Global Economy

Saravana Bhaskar
News Article
26th Sep, 2017
How is the Agitation Between US and North Korea Expected to Impact Global Economy

The tensions between US and North Korea has mounted after President Trump responded to the threats from North Korea’s leader Kim Jong Un, saying- "fire, fury, and frankly power, the likes of which this world has never seen before"

The conflict between the two nations is aggravating, something that has not been witnessed in the last two decades. Assorted provocations from North Korea on missile launches and threats on experiments of nuclear weapons have contributed to build up the conflict.

Many analysts and academics have started serious discussions on a physical engagement between the two nations.

The nuclear or conventional conflicts would result in a disastrous loss of life and a widespread economic turmoil that is most likely to be a major international dispute.

It is being said that since the end of the World War II, this would be the first time the use of nuclear weapons and the impacts would be worldwide.

The eventual impacts on the economy, either on a local or a global scale and all other possible scenarios have been assembled by the researchers at Oxford Economics, who have stated their thoughts in a handy table.

The pressure of the resulting economic shock would be mainly borne by the Korean Peninsula, but many of the other countries will also be adversely affected. It would be widespread worldwide, affecting supply chains. Most hard hit will be the South Korean export items such as- liquid crystals, semiconductors, automotive manufacturers and shipbuilding spares. The overall export curve is expected to undergo a sharp decline.  

"The market impact is significant. Equities fall sharply in the region, accompanied by abrupt exchange rate and bond market adjustments," Oxford Economics' head of macro scenarios, Jamie Thompson, and economist Oliver Salmon wrote.

"While market prices generally rebound swiftly with the resolution of conflict, the impact on activity is more persistent," they added.

"Growth remains subdued in 2018 and 2019 — and not only for countries at the centre of the geopolitical tensions. Overall, global growth slows significantly, to an annual rate 0.4pp below baseline over this period, with emerging markets recording even larger undershoots."

Saravana
Blog Author

Saravana Bhaskar is the Brain Child behind incubation of White Matter. With over a decade of rich banking experience, he has handled many eminent positions in bank from Global Gateway Coordinator to Portfolio Head -South India. He is catalyst in steering White Matters’ association globally, with his proven abilities of leadership; his vision is to achieve transformational changes at White Matter. Bhaskar is true Car enthusiast, who has an insatiable interest in cars. He is an avid reader, and has ear for Music.

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