How global economy would be affected if the US – North Korea conflict happened

The United States is the second country with the most economic growth around the world according to the International Monetary Fund.

On the other hand, according to Leather and Tan, a lasting economic war against North Korea could significantly increase the United States federal debt, as having 75% GDP already is quite high.

Plus, the experts at Capital Economics pointed out that countries involved in major conflicts since World War II registered very significant falls in economic output. Thus, a conflict between these countries would  have a strong impact on worldwide economy. On the other hand, this can lead to any country involved to have heavy economic loss.

The reason is simple, the conflicts that have taken place in the past reveal how large a war would be and the impact it could have on the country’s economy. For example, Syria had a fall of 60% of the country’s GDP.

On the other hand, World War II is considered the most devastating military conflict in the world, however, the Korean War -which took place from 1950 to 1953, caused the death of 1.2 million people in South Korea and had an impact of over 80% GDP in falls.

If there’s a conflict, experts stated that it would happen in the Korean peninsula. And said location may be the one that could be the most damaged. Analysts at Capital Economics also comment that the impact on South Korea could spread to a wider global economy, as South Korea represents 2% of the world’s GDP.

It is worth noting that South Korea is one of the largest producers of LCD in the world, with 40% of production and worldwide sale, also, it is the second largest in semiconductors and has 17% market share. In addition, South Korea is world renowned for being a very important manufacturer of automobiles.

Donald Trump vs Kim Jong-Un

Donald Trump vs Kim Jong-Un

On the other hand, analysts commented that if South Korean production would be affected or suffered damages by a war, there could be worldwide shortages, and it could be a long-term disruption, it is said it could take at least two years in building a semiconductor factory from scratch.

The impact in United States

Not only Korean countries could suffer an impact on their economy, United States could suffer a very strong impact on the economy due to the high cost that comes from fighting a war on foreign soil.

For instance, the Gulf War in 2003 and its consequences had an estimated expenditure of more than 1 trillion U.S. dollars. This could significantly affect the American economy. They are watching the reserves of investors after the threats between the leaders of the United States and North Korea.