Post-COVID-19 Economy: "Expectations for Rise in Korea's National Brand"

[Suwon Ilbo=Park No-hoon] The Gyeonggi Research Institute announced on the 12th that the global economy after COVID-19 will see rapid advancement in digital economy and deglobalization, and that Gyeonggi Province needs to establish support systems for small business owners and SMEs while formulating strategies to become a hub for global advanced enterprises.

This comes amid expectations that Korea's national brand will rise as a global quarantine standard model, with prospects for increased potential as a global advanced industrial base.

The Gyeonggi Research Institute, which published 'Industrial Strategy in Post-COVID-19, New Normal Era,' diagnosed that despite the significant damage COVID-19 has caused to SMEs in Gyeonggi Province, Korea's successful quarantine efforts present an opportunity for economic leap forward for the Korean economy.

According to a survey conducted by the Gyeonggi Research Institute in April targeting 400 SMEs (materials and parts companies) in Gyeonggi Province, 60.0% of surveyed companies reported that the damage from COVID-19 was severe during the first quarter of 2020.

Regarding difficulties, they cited decreased domestic consumption (32.7%) and uncertain economic conditions (20.9%). In fact, first-quarter domestic sales for the surveyed companies decreased by 9.1%, indicating deteriorated business conditions.

For urgent policies to recover from damage, companies prioritized liquidity support (29.7%), followed by tax reduction and deferral (25.0%), domestic demand activation policies (18.3%), and employment activation support (11.3%).

However, the report noted that despite such circumstances, Korea successfully implemented quarantine measures by demonstrating outstanding leadership based on transparency and credibility. It projected that the global economy, which had previously emphasized efficiency, will shift toward minimizing uncertainty based on transparency and credibility after COVID-19.

The assessment is that South Korea's investment credibility, having led the world in quarantine standards, has improved, and this has heightened the potential for global enterprises' advanced factories, R&D; centers, and data centers to use the country as a hub.

The Gyeonggi Research Institute also projected that economic paradigms will shift after COVID-19. It noted that digital economy will be promoted through acceleration of non-face-to-face business and online services, and deglobalization will accelerate as countries strengthen their own value chains rather than global value chains to establish stable manufacturing ecosystems.

Emerging industries after COVID-19 include ▲online retail, ▲digital content industries such as online video, games, and webtoons, ▲remote medical services and smart healthcare industries, and ▲EdTech and video conferencing-related industries.

Kim Gun-soo, senior research fellow at the Gyeonggi Research Institute, said, "It is important to establish support systems for small business owners and SMEs to prepare for rapid transition to digital economy," adding, "A decrease in local consumption is fatal for small business owners without online sales channels, so establishing online sales outlets for them is an important strategy."
He further stated, "Systematic investment attraction strategies are needed for Gyeonggi Province to become a global hub for advanced industries," proposing the establishment of systematic strategies for attracting advanced factories, R&D; centers, and data centers, and improving domestic U-turn company programs and foreign investment area designation systems.