By Kang Seung-woo
The upcoming G20 summit in Seoul is likely to boost the Korean economy not only by bolstering its exports and job creation but also by improving its international image, the Korea International Trade Association (KITA) said Thursday.
In its latest report, the Institute for International Trade (ITT) at KITA said that the effect of the G20 summit on the Korean economy would surpass 31 trillion won ($27.75 billion).
In addition, it also said that without international cooperation of the G20 nations, there might have been another recession similar to the Great Depression in 1930’s.
The heads of the G20 member nations, including U.S. President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy, will come to Seoul for the meeting, scheduled for Nov. 11 and 12, while over 15,000 people are also expected to visit the city. It is the first time for a non-G7 member to chair the global gathering.
“Successfully hosting the G20 summit will not only have an impact on our economy but on all aspects of our society, including political, social and cultural sectors,” IIT President Lee Kyung-tae told reporters.
“The economic impact, of course, will especially be enormous as it will draw the largest number of visitors from overseas for a single event in the country’s history and help improve the country’s image as the host nation of the prestigious summit,” he added.
The ITT said that the direct economic impact of the summit is forecast to reach 266.7 billion won, including 96.9 billion won from visitors, who are expected to spend an average of $3,000 each during their stay, while the meeting is the equivalent of running 169.8 billion won worth of advertisement.
The institute expects that the nation will earn worldwide recognition by hosting the two-day summit and it will contribute to pushing up its exports by 3.9 percent, or 20.14 trillion won. There will also be a ripple effect of 10.57 trillion won.
Hosting the summit is predicted to create 166,000 jobs.
According to the report, the summit is likely to help Korea’s credit rating move up by one notch, which will reduce the nation’s costs of borrowing foreign funds by about 290.4 billion won.
Meanwhile, the ITT gave mutual assistance between G20 members credit for dealing with the global financial crisis quickly.
It estimated that if the financial turmoil continued to lag, Korea, Asia’s fourth-largest economy, would register negative growth for the second straight year, with its exports reversing to the 2005 level, which reached $284.4 billion.
Its unemployment rate would stretch up to 10 percent, while per capita income would decline by 2.86 million won between 2009 and 2010, it said.
“The international cooperation from the G20 has contributed to the Korean economy and it will play a bigger role in maintaining sustainable growth in the international economy,” an official of KITA said.
“Through this summit, enterprises will be able to earn recognition and they will be required to strengthen themselves to remain at an upgraded level.”