Foreign Affairs Outlook for 2021

What Will Happen to Global Economy and Trade in 2021?

Dr. SUH Jin Kyo

Senior Research Fellow, Korea Institute for Int'l Economic Policy

jksuh@kiep.go.kr

English Abstract

The global economy and trade, which have slumped sharply due to the influence of the COVID-19 Pandemics, will technically rebound in 2021. However, if the global distribution of the COVID-19 vaccines and vaccination do not operate smoothly, lower rebound is expected. Regarding trade frictions between the U.S. and China in 2021, it is likely to be a quiet year to explore each other and prepare for possible conflicts rather than a year of a full-fledged confrontation. The Biden administration, which values the multilateral system, will initiate to reform the World Trade Organization through cooperation with traditional allies in order to rebuild the leadership of the U.S. in the international community and regulate the industrial subsidies of China. South Korea should establish and consistently pursue universal principles that are based on national interests as an in-between country in preparation for intensifying trade conflicts between the U.S. and China. Meanwhile, the South Korean government should engage and strengthen its relations with other similar powerful trading countries to prepare for the unilateral line-up of the U.S. and China.