Arirang News: Interview with Danny Leipziger: S. Korea’s economy under pressure amid global tariff wars

Welcome to Within The Frame, where we bring the most pressing issues across the globe into focus. I’m Kim Mok-yeon. The global economy stands at a crossroads, caught in the crossfire of an escalating tariff war that’s shaking markets and rattling confidence worldwide. Just last month, the IMF slashed its growth forecast, signaling deeper trouble ahead as trade tensions between the U.S. and China flare up and ripple across the globe. For South Korea, an export-driven powerhouse, the stakes couldn’t be higher — facing stalled growth, soaring risks, and tough choices ahead. On Within The Frame tonight, we hear from Danny Leipziger, professor of international business and international affairs at George Washington University, who was also the former vice president of the World Bank, for a clear-eyed view on how this trade battle will shape the world economy and what it means for Korea’s future.

Welcome to the program Professor Leipziger

Last month, the IMF revised its global economic growth forecast for this year down from 3.3% to 2.8%, reflecting concerns over President Donald Trump’s tariff policies. Professor, How would you assess the current state of the global economy?
Not long after his inauguration, U.S. President Donald Trump has been pursuing tariff policies as a means to address the U.S. debt problem. As an economic expert, what is your take on this approach? Do you believe tariffs can positively contribute to debt management?
The U.S. and China, after a prolonged “tariff war,” recently struck a dramatic agreement to each reduce tariffs by 115 percentage points through trade negotiations. While this has alleviated some uncertainty in the global economy, concerns about a potential recession persist. What is your outlook in this regard?
On top of that, Washington and Beijing also agreed to a 90-day mutual tariff suspension. This leaves rooms for speculations that the tariff war is not yet over. In your view, what are the most important factors in ensuring both sides adhere to this tariff agreement?
Let’s also touch upon the Korean economy Prof.Leipziger, a recent report by a state-run Korean think tank forecasts this year’s economic growth rate at just 0.8%, citing sluggish exports and weak domestic demand caused by the tariffs. In the past, you’ve emphasized Korea’s relatively open export markets as part of its growth strategy. Considering the current global trade conditions, how do you view this sub-1% growth forecast?
As for trade talks, working-level officials from South Korea and the U.S. held a second technical meeting in Washington on tariff issues a few days ago. As negotiations begin to gain traction, it’s likely that the contents of the “July Package” will be left to the next Korean administration. What kind of strategic approach should Korea’s new government take in trade talks with the U.S.?
Beyond external factors such as declining exports due to tariffs, what domestic risks is the Korean economy facing? You’ve previously pointed out that the aging demographic and a shrinking workforce pose significant challenges to Korea’s economic growth. Could you assess the long-term impact of these issues on Korea’s future growth?
You’ve also pointed out that South Korea’s high household debt deals a blow to the nation’s economic growth. Household debt is now at an all-time high. With the U.S. maintaining high interest rates, how could this combination threaten the Korean economy? What policy solutions would you suggest?
Beyond the issues already discussed, what other risks should we be paying close attention to in the current economic environment?
Finally, drawing from your experience at the World Bank, what do you believe should be the top economic policy priority for Korea’s next administration?