Can Biden Bounce Back? U.S. Economy and 2024 Election Prospects
Analysts in South Korea predict that the U.S. economy, which has exhibited unexpected prosperity this year, will maintain its position as a leading force in global economic growth, with steady expansion anticipated for the coming year. This positive outlook is expected to favorably impact the South Korean economy, which heavily depends on exports.
Nonetheless, there is an expectation that uncertainty will linger over the Korean economy in the year ahead. This uncertainty stems from challenges in predicting a recovery in the Chinese economy and ongoing tensions in global trade attributed to the persisting U.S.-China conflict.
Positive Outlook for the U.S. Economy
The National Diplomatic Academy recently forecasted that the U.S. economy will continue its steady growth into 2024, serving as the pillar of global economic growth. The Academy explained that this optimistic outlook is based on the robust expansion of personal consumption in the U.S., establishing the possibility of a soft landing for the U.S. economy.
Professor Min Jeong Hoon of the National Diplomatic Academy explained at a briefing held at the Government Seoul Office yesterday, “Looking at the shopping during this holiday season, consumers have opened their wallets more than expected,” and “Given the good performance in the real economy, there is a possibility that the U.S. economy will prosper in the first half of next year.”
In fact, according to the Mastercard SpendingPulse report, U.S. retail sales, excluding autos, during the Thanksgiving and Christmas period increased by 3.1% compared to the same period last year.
If the U.S. economy continues to grow, it is expected to impact the South Korean economy positively. This year alone, the South Korean economy has been dramatically affected by high interest rates, a slump in the semiconductor market, and a slowdown in China’s growth. However, due to the prosperity of the U.S. economy, exports such as automobiles to the U.S. have increased, allowing for a surplus trend to continue.
Rhee Changyong, Governor of the Bank of Korea, said at a press conference on the 30th of last month, “Last year, it was embarrassing due to the large impact of exchange rates (due to the prosperity of the U.S. economy),” but “Now, the high U.S. growth rate is good for our exports, so I hope the U.S. economy has a soft landing.”
U.S. Economic Situation and Upcoming Election
The U.S. economic situation next year is critical because it will significantly influence the results of the U.S. presidential election in November. Depending on who wins the election between the current leading candidates, President Joe Biden and former President Donald Trump, the Korean economy and U.S.-Korea and U.S.-China relations could be significantly impacted.
Currently, President Biden’s approval rating is lower than that of former President Trump due to high inflation in the U.S. and the Israel-Hamas war. However, the National Diplomatic Academy explains that the situation could change next year as the war enters its end phase and the U.S. price and economic situation improve.
Professor Min said, “The economic situation greatly influences the approval rating, so the U.S. economy in the first and second quarters of next year is very important.” He added, “If the U.S. economy is positive in the first half of next year, a different situation could be formed. The situation will be determined depending on how voters perceive Biden’s policies positively.”
The current economic and political relationships could continue if the U.S. economy grows and President Biden is re-elected. However, if President Trump wins, there could be changes in U.S.-Korea trade and the U.S.-Korea-Japan cooperation structure.
While assuming that the importance of U.S.-Korea cooperation will not change even under the Trump administration, Professor Min said, “If former President Trump is elected, the focus on minimizing national waste and maximizing U.S. interests in trade will become more explicit.” He added, “There could continue to be risks in defense cost sharing, economy, and message management.”
Challenges in China’s Economy
U.S.-China Power Struggle Continues
The Chinese economy, which has been the largest export market for Korea for the past 20 years, is expected to face difficulties next year. This is due to the continued slump in the real estate sector and the lackluster results in finding new key growth drivers. This is a negative factor for the Korean economy, which heavily depends on exports to China.
Professor Kim Han Kwon of the National Diplomatic Academy said, “Next year, China will continue to strive to manage the economic instability factors that were stably highlighted this year and will strengthen the party-centered management.” He pointed out, “China needs to find growth momentum, but it’s not easy under the pressure from the U.S.”
Professor Choi Jin Baek of the China Diplomatic Center at the National Diplomatic Academy said, “China needs to make efforts to reform its structure to create growth momentum, but it’s becoming difficult under President Xi Jinping’s one-man regime, which could strengthen China’s low-growth trend in the long run.” He added, “If this is perceived negatively by the Chinese people, it could become a dangerous point.”
The U.S.-China power struggle, accelerating the fragmentation of global trade and putting pressure on the Korean economy, is also expected to continue next year.
According to a report by the Bank of Korea yesterday, if the U.S. and China divide and strengthen trade barriers between blocks and implement protectionist measures, our exports could decrease by up to 10%, and global exports could decrease by around 4%.
The National Diplomatic Academy has stated that the United States is expected to maintain its competitive stance towards China in the coming year. Given the current political climate, the Academy added that a fundamental shift in the U.S.’s policy towards China seems unlikely. This assessment considers the high level of anti-China sentiment prevalent in the U.S., which, according to the Academy, leaves both the Biden administration and Trump as candidates with little choice but to continue their hardline policies towards China.
By. Moon Je Won