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If war were to break out, the biggest toll would be the humanitarian one. But it would shake the global economy too.
An analysis by Capital Economics Ltd. found that the supply and production of everything from smartphones and cars to flat screen televisions would take a significant hit, hurting growth around the world and pushing up prices. That’s because South Korea is embedded in a supply chain that feeds production of electronic appliances.
Here are some of the channels:
South Korea is the biggest producer of liquid crystal displays — used in televisions and other electronic devices — and accounts for 40 percent of their global production.
It’s the second biggest maker of semiconductors — used in smartphones — with 17 percent of market share.
The Asian nation is also one of the world’s biggest car makers and is home to the globe’s three biggest ship builders.
“If South Korean production was badly damaged by a war there would be shortages across the world,” economists Gareth Leather and Krystal Tan wrote in a note. “The disruption would last for some time — it takes around two years to build a semiconductor factory from scratch.”
Then there’s the risk to shipping lines. Any conflict would likely gum up major routes along the eastern seaboard of China, the world’s biggest trading nation.
“If it became too risky for container ships to enter and exit Chinese ports, it would cause even further disruption to the global economy,” according to Capital Economics.
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