The Year of the Rabbit is upon us. I am honored to have this opportunity to greet the readers and supporters of i-KIET Industrial and Economic Issues at the dawn of the New Year.

At the outset of 2022, the South Korean economy sought to start anew, aiming to finally surmount the hurdles of COVID-19. Unfortunately, however, the economy is now confronted with an unprecedented level of uncertainty, as one unforeseen risk after another emerged over the course of 2022. These risks include the Russian invasion of Ukraine, the abrupt turn in US monetary policy, China’s only recently-abandoned zero-COVID-19 policy and draconian lockdowns, the intensifying conflict over economic hegemony between the world’s great powers, and the growing financial insecurity of emerging economies. The Korean economy has thus been seeing clear signs of slowdown since late 2022, especially in the manuf acturing sector.

Whatever optimism people had harbored for the world economy in 2023 has been fading rapidly. In its World Economic Outlook published last October, the International Monetary Fund (IMF) projected that the global economy would grow by 2.1 percent in 2023, down from the 2.9 percent expansion recorded in 2022. The IMF forecasts that a significant number of economies are poised to enter a recession this year.

There are warning signs with respect to the Korean economy as well. The double whammy of soaring inflation and rising interest rates is expected to handicap the Korean economy this year, with exports, investment, and consumption all expected to struggle, conspiring to cap the growth rate at 1.9 percent. The 13 major industries of the Korean economy are likewise forecast to struggle, particularly with the downturn of the semiconductor business cycle and contracting global demand. Although the automotive, shipbuilding, secondary battery, and health and biotech industries are expected to continue along their growth trajectory in 2023, the majority of other industries, including semiconductors, petroleum products, and steel, face hard times ahead.

The extreme difficulties posed by external factors compound the many domestic problems Korea has yet to tackle, and in addressing both the Korean economy is now confronting a distinct new challenge. It is with this in mind that we at the Korea Institute for Industrial Economics and Trade (KIET) pledge to do our utmost to reinvigorate the domestic economy help Korean industries take the next step forward. We will do this by refocusing our efforts on analyzing the most pressing issues facing the economy and contributing to the development of policies targeting the real economy.

I wish success and happiness for all of our readers and their families. The research faculty at KIET, who constitute the preeminent industrial development think tank in Korea, promise to faithfully execute the duties entrusted to them.