The World Is Now : An Age of Slow Economic Growth and Protectionism

A Re-Closing Border

     Remember the COVID-19 pandemic that hit our lives in 2019? The pandemic, which lasted for about three years, seems to have come to an end, but our lives haven’t gone back to before the pandemic. The same goes for the economy as well. The global economy, which has stagnated since the pandemic, is gradually recovering. But the pace of recovery is not comparable to the pre-COVID-19 trend. The International Monetary Fund’s (IMF) forecast for global economic growth in 2025 is 3.3%. It is below the pre-pandemic 20-year average of 3.7% (IMF, 2025). The Organization for Economic Cooperation and Development (OECD) also mentioned that “the global economy  is in a trap of low growth, with slow productivity and investment recovery.” (OECD, 2025). On top of this, global trade order is shaking due to the national priority policies. The international economic order, which used to overcome the crisis centered on cooperation in the past, is now changing into a trend of competition. And at the center of it is the “America First” that the United States (U.S.) represents.

     Revival of Protectionism, The Beginning is “America First” President Donald Trump’s “America First” brought about a major change in the global trade system, which was freely implemented under the World Trade Organization (WTO). Upon re-appointment as U.S. president, he put forward the slogan “Buy American, Hire American” at the beginning of his term. In the name of protecting U.S.’s own industry, he began to impose high tariffs on major importing countries, including China. On the surface, these measures seemed to protect the U.S. economy, but as a result, they resulted in a contraction of global trade, including the U.S., and intensifying supply chain imperfections. In particular, the U.S.-China trade dispute peaked, causing a chain shock to the global supply chain. Global trade volume plummeted due to rising production costs and investment uncertainty, resulting in production bases being dispersed to third countries. The world began to seek stability. over efficiency and chose protectionism to protect its own industries over free trade. All of these have come together to become the starting point for the spread of protectionism today.

New Trade Barriers, Climate Changeand Technological Advances

     Protectionism is now spreading beyond just tariff wars to the realm of “technology” and “environment”. The European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) is a prime example. CBAM is a system that imposes a “carbon tax” based on how much carbon imported products have emitted during the production process, and the EU aims to implement it in earnest from 2026. Although it’s argued that CBAM is to respond to climate change by imposing taxes according to the carbon emissions of imported goods, criticism continues that this policy serves as a trade barrier that restricts imports by applying carbon reduction obligations to imported products.

     The Inflation Reduction Act (IRA) is in a similar vein. The IRA provides enormous tax credits and subsidies for eco-friendly technology industries such as electric vehicles and renewable energy. However, to receive the above benefits, it must meet the production requirements in the United States or in North America. In the end, it is a means and trade barrier for attracting foreign investment in the United States. This trend shows that the competitive structure of the global economy is shifting from simple trade-oriented to technology-energy-oriented hegemonic competition.

Korea’s Countermeasure – Balanced Diplomacy and Eco-Friendly Strategies

      In the age of global economic recession and the spread of protectionism, Korea is facing a task of finding a complex diplomatic balance between the U.S. and China. Too much reliance on either side could weaken Korea’s export and investment base. Also, an unconditional neutrality strategy carries the risk of losing economic trust and diplomatic initiative. Therefore, Korea should actively build a global cooperation network centered on future core industries such as semiconductors and AI technologies based on balanced diplomacy. In addition, the transition of eco-friendly technologies should be used as  the main axis of national competitiveness to create a sustainable model that converts global competition into cooperation.

     The world is now facing a common task of slowing economic growth. In the short term, domestic industrial protection policies may bring temporary benefits. But in the long run, they will weaken the cooperative structure of the global economy and reduce international exchanges. This will reduce the growth engine of the global economy, which will eventually return to another task that we all have to solve together.

     Although slowing global economic growth and the spread of protectionism are inevitable, only countries that turn this into an opportunity will find a way to sustainable growth. The restoration of the multilateral cooperation system through the WTO and cooperative competition will be a new driving force that will lead the global economy to growth.

Shin Ye-eun (ST Reporter)

ruiyin1027@soongsil.ac.kr