Bloomberg Warns of $4 Trillion Global Economic Loss if Korean Peninsula War Erupts

A study has found that a war on the Korean Peninsula could result in millions of deaths in the first year, as well as a $4 trillion (approximately 615 trillion yen) loss to the global economy. Bloomberg Economics stated on July 29 that while the possibility of an all-out war between the North and South is very low, it is not impossible. In such a scenario, they estimated that global GDP would decline by 3.9%. This is more than double the 1.5% decline in global GDP caused by Russia's invasion of Ukraine.

Bloomberg stated, "The global economy has no 'Plan B' when it comes to relying on South Korea's semiconductors, a crucial link in the electronics supply chain. Like Taiwan, South Korea's significance to the global economy as a major chip producer extends beyond the size of its GDP." They mentioned that Samsung Electronics, one of the world's top 30 companies by market capitalization, produces 41% of the world's DRAM chips and 33% of NAND flash memory chips. They also pointed out that South Korea produces about 4% of all electronic components used in factories worldwide and about 40% of all memory chips.

Bloomberg projected that industries would be devastated in the first year following the outbreak of war, leading to a potential 37.5% hit to South Korea's GDP. China is also expected to see a 5% decline in GDP due to the inability to procure South Korean semiconductors, reduced trade with the US, and disruptions in transportation. The US is also expected to be impacted by a 2.3% decline due to chip shortages and other factors. Southeast Asia, Japan, and Taiwan, which rely on South Korean chips and are vulnerable to maritime disruptions, are also expected to suffer significant losses.

Bloomberg also pointed out the potential impact on the global economy if the Kim Jong-un regime were to collapse. In such a scenario, they estimated that GDP would decline by 2.5% in South Korea, 0.5% in China, 0.4% in the US, and 0.5% globally.