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● Won Plunges, Emergency Meeting, Trump’s Weak Dollar Plan

2024 Global Economic Status Roundup: Tariffs, Exchange Rates, Growth Rates, and Financial System Changes at a Glance

Today's economic reading covers the behind-the-scenes stories of US-China and US-Korea trade negotiations, a reinterpretation of exchange rate pressures and the 'Plaza Accord,' the background of the KDI's downward revision of Korea's economic growth rate, the acceleration of a cashless society, and the changes in the financial market due to the increase in the deposit protection limit, summarizing key economic issues.
Let's systematically examine how the rapidly changing global economic structure affects our lives, investments, and the financial market.

1. US-Korea Trade Negotiation Table – Hidden Key Issues

– High-level US-Korea trade ministerial meeting held in Jeju, continuing multilateral consultations following last month’s meeting in Washington
– Composition of attendees: Chung In-kyo (Head of the Korean Trade Negotiation Headquarters), Greer (US Trade Representative), Li Cheng-gang, etc.
– Key background: US-led tariff increases, global supply chain restructuring, and US manufacturing base repatriation policy
– Core of negotiations:
– The US is promoting domestic manufacturing exports by inducing a weaker dollar.
– Demanding artificial appreciation of the currency values of counterpart countries (Korea, China, Japan, etc.)
– Explicit exchange rate agreements are difficult, but restraining market intervention and pressure ‘under the table’ are the practical goals.

2. Korea on the US’s Exchange Rate Watchlist – Reality and Implications

– The US Treasury Department releases an exchange rate report every half-year. Korea remains on the ‘watchlist’ due to conditions such as its trade surplus with the US and market intervention.
– If designated as an exchange rate manipulator, the US may impose economic sanctions such as tariffs and non-tariff barriers.
– The possibility of a shift from a tariff war to an exchange rate war is emerging.
– Following the Trump era, a complex pressure card of “exchange rates, security burden sharing, and investment” has appeared.

3. KDI Lowers Korea’s Economic Growth Rate Forecast to a Record Low of ‘0.8%’ – Its Meaning

– Trend of 2024 growth rate forecasts:
– May 2023: 2.1% → November 2023: 2.0% → February 2024: 1.6% → May 2024: 0.8%
– Simultaneous sluggishness in domestic demand and exports, similar to the global financial crisis (2008, 0.8%)
– Extreme low-growth signal significantly below the potential growth rate of 2%
– A slight improvement (1.6%) is expected next year due to the ‘base effect,’ but ‘long-term stagnation’ is feared until a return to the normal track.

4. Acceleration of a Cashless Society – Economic Impact of Payment Changes

– As of 2023, the proportion of cash in total payment methods entered the 10% range for the first time at 15.9%
– A sharp decrease from 41% in 2013 to 15.9% in 2023 over 10 years
– Rapid increase in alternative payment methods such as credit cards, debit cards, and mobile cards (fintech)
– Clear trend of cash use centered on the elderly and non-cash use strengthened around the MG generation
– The proportion of cash use is expected to continue to decline in the long term.
– ‘Digital transformation’ is fundamentally changing the structure of the financial market.

5. Increase in Deposit Protection Limit (50 million won → 100 million won) – Expectations and Concerns

– Purpose: To restore depositor confidence in response to financial institution insolvency (especially in secondary financial institutions, real estate PF issues)
– Expected effect: The possibility of more active inflows into relatively high-interest secondary financial institutions
– Concern: The phenomenon of funds concentrated in secondary financial institutions → possibility of deepening instability in the entire market
– A balance between strengthening the deposit insurance system and financial market stability is needed.

< Summary >
Attention should be paid to the hidden exchange rate pressure in the 2024 US-Korea trade negotiations, the 'under-the-table' Plaza Accord-style movements, and the realistic impact of the US's exchange rate watchlist status.
The KDI's downward adjustment of Korea's economic growth rate to the level of the global financial crisis is due to the dual sluggishness of exports and domestic demand.
The acceleration of a cashless society and the expansion of the deposit protection system are also major talking points.
Digital financial transformation, low-growth risks, and the rekindling of trade and exchange rate wars are expected to directly affect the constitution of the Korean economy in the future.

2024 Economic Outlook Key Summary (SEO Optimized)

The 2024 global economic trend is summarized as a shift from a ‘tariff war’ to an ‘exchange rate war,’ US-China and US-Korea exchange rate negotiations, and a sharp decline in growth rates.
The Korean economy is in a state of increased uncertainty in the export environment due to tariff and exchange rate issues, and concerns about financial crisis-level low growth are growing due to the KDI’s downward revision of the growth rate forecast (0.8%).
In addition, policy changes such as a cashless society, digital transformation, and an increase in the deposit protection limit are changing the financial market landscape.
We provide the latest analysis to help you grasp all the major economic keywords such as the 2024 economic growth rate, exchange rates, financial market, digital finance, and global economic outlook at a glance.

[Related Articles…]

• Global Exchange Rate War, Impact on the Korean Economy and Outlook
• Decline in Korea's Economic Growth Rate, What are the New Policy Solutions?

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