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$4 Trillion Loss to World Economy Expected if War Breaks Out on Korean Peninsula - Bloomberg
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Summarized by durumis AI
- A study has found that a war on the Korean Peninsula could result in millions of deaths and a $4 trillion loss to the global economy in the first year, with South Korea's GDP expected to be hit the hardest, declining by up to 37.5%.
- Bloomberg estimates that the global GDP would fall by 3.9% due to the world's dependence on South Korea's semiconductor production, more than double the damage caused by Russia's invasion of Ukraine.
- The study also predicts that the collapse of the Kim Jong-un regime would lead to a 2.5% decline in South Korea's GDP, a 0.5% decline in China's GDP, and a 0.4% decline in the United States' GDP, negatively impacting the global economy as a whole.
A study has found that a war on the Korean Peninsula could result in millions of deaths in the first year alone, as well as a $4 trillion (about 615 trillion yen) loss to the global economy. Bloomberg Economics said on July 29 that while the possibility of a full-scale war between the two Koreas is very low, it is not impossible. In that case, the global GDP would decline by 3.9%. This is more than twice the 1.5% decline in global GDP caused by Russia's invasion of Ukraine.
Bloomberg stated that "there is no 'Plan B' for the global economy, which relies on South Korean semiconductors as a key link in the electronics supply chain. Like Taiwan, South Korea, as a major chip producer, is critical to the global economy, meaning its importance to the global economy exceeds the size of its GDP." It mentioned that Samsung Electronics, one of the top 30 companies in the world by market capitalization, produces 41% of the world's DRAM chips and 33% of NAND-type memory chips. It also pointed out that South Korea produces 4% of all electronic components used in factories around the world and about 40% of all memory chips.
Bloomberg predicted that industries would be devastated in the first year after the outbreak of war, resulting in a maximum of 37.5% hit to South Korea's GDP. China is also expected to see its GDP decline by 5% due to the inability to procure South Korean semiconductors, a decrease in trade with the United States, and transportation disruptions. The United States is also expected to be hit by 2.3% due to chip shortages. Southeast Asia, Japan, and Taiwan, which rely on Korean chips and are vulnerable to maritime disruptions, are also expected to suffer significant damage.
Bloomberg also pointed out the potential impact on the global economy if the Kim Jong-un regime collapsed. In this case, global GDP is projected to decline by 2.5% in South Korea, 0.5% in China, 0.4% in the United States, and 0.5% overall.
