That means several companies outside of South Korea would be forced to halt production, which would translate into a sharp rise of various electronic products globally, Capital Economics said.
But the disruption doesn’t stop there. Pricier products could then negatively impact developed economies.
“U.S. spending on electronic items, including smart phones, cameras, tablets and computers accounts for roughly 1 percent of the consumer price inflation basket. If a war in Korea caused prices of these items to double, it would add 1 percentage point to U.S. inflation,” the report warned.
As other industrialized nations encounter similar impacts, the real purchasing power of consumers would fall and the lower spending could prompt central banks to respond by hiking interest rates, the report continued.