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Intelligence for Better Decision Making
| Domain | Causal Chain | Possible Outcome |
|---|---|---|
| Macroeconomics & Growth | (Semiconductor export boom ↑ → Terms-of-trade index ↑ → Current-account balance (% GDP) ↑ → Potential GDP growth revision ↑ → Real GDP growth ↑) | The enhanced terms of trade and external surpluses will underpin upward revisions to potential output and drive stronger real GDP growth. |
| Macroeconomics & Growth | (Memory chip price surge ↑ → Import-price pass-through ↑ → Headline CPI/Core CPI ↑ → Inflation volatility ↑ → Inflation-targeting credibility ↓) | Rising import-price pass-through and inflation volatility may erode confidence in the central bank’s ability to keep inflation near its 2 percent target. |
| Competitiveness | (Semiconductor export boom ↑ → Trade-openness & preferential access ↑ → Real export market-share change ↑ → High-value-added export share ↑ → Total-factor productivity level vs frontier ↑) | Greater preferential access and high-value trade gains will accelerate productivity convergence toward the global frontier. |
| Macroeconomics & Growth | (DRAM price surge–driven profits ↑ → Capital-formation rate ↑ → Business fixed-investment growth deviation ↑ → Private fixed-investment growth ↑ → Potential GDP growth revision ↑) | Surging profits will finance elevated business investment, prompting analysts to hike potential GDP growth estimates. |
| Macroeconomics & Growth | (Memory chip price surge ↑ → Global-value-chain reconfiguration velocity ↑ → FDI net inflow (% GDP) ↑ → Foreign-owned green-field project count ↑) | Accelerated value-chain shifts will draw substantial FDI and increase foreign-owned greenfield semiconductor projects. |
| Firms | (South Korean PPI inflation ↑ → Supply-chain restructuring cadence ↑ → Supplier-delivery-times index ↓ → End-to-end supply-chain lead-time deviation ↓ → Capacity-utilisation in manufacturing ↑) | Faster supply-chain restructuring and reduced lead-time variability will boost manufacturing capacity utilization. |
| Technology & Innovation | (Strategic-sector export risk ↑ → Dual-use export-control restrictiveness ↑ → Semiconductor fab utilisation rate ↓ → AI inference cost index shift ↑ → AI adoption GDP uplift ↓) | Tighter export controls will reduce fab utilization, raise AI inference costs, and dampen AI-driven GDP gains. |
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Lee centers foreign policy on strategic autonomy in shaky world
Korea Herald | English | News | Jan. 23, 2026 | Shifting Geopolitical Alliances
President Lee Jae Myung outlined a foreign policy focused on "strategic autonomy" and "pragmatic diplomacy centered on the national interest" amid a volatile global environment. He stressed the importance of self-reliant national defense as essential to navigating growing economic slowdowns that could intensify interstate rivalries and military conflicts. South Korea, already the world's fifth-largest military power, must continue to strengthen its defense industry to avoid risks of entrapment or abandonment in international alliances.
Regarding relations with China, Lee described his recent state visit as a turning point, emphasizing room for cooperation beyond trade, including diplomatic and security coordination and cultural exchanges. On North Korea, Lee advocated a pragmatic, phased approach to denuclearization focused on peaceful coexistence and deterrence. He acknowledged the current difficulties in achieving unification and called for prioritizing avoidance of war, urging dialogue and mutual respect while recognizing the continued reality of North Korea’s nuclear arsenal.
Domestically, Lee dismissed calls for a direct meeting with opposition leader Rep. Song Eon-seog, urging initial dialogue to occur party-to-party before any presidential involvement. This stance comes amid controversy over dual special prosecutor investigations into Democratic Party lawmakers and the opposition’s ongoing hunger strike demanding these probes. Lee also addressed the contentious nomination of Lee Hye-hoon to head the Ministry of Planning and Budget, noting he has not made a final decision and advocated proceeding with a confirmation hearing despite opposition boycott, emphasizing the nominee deserves a chance to respond to allegations.
U.S. expert proposes S. Korea, U.S., others form 'collective economic deterrence' pact against Chinese pressure
Yonhap | English | News | Jan. 23, 2026 | Shifting Geopolitical Alliances
Victor Cha, a U.S. expert and president of the Geopolitics and Foreign Policy Department at CSIS, proposed the creation of a "collective economic deterrence" pact involving South Korea, the United States, Japan, and other countries to counter China's economic pressure. This proposal comes amid concerns of possible Chinese retaliation toward South Korea following its nuclear-powered submarine project, which the U.S. has approved. The pact aims to collectively respond to any economic coercion by China, similar to the collective security principle of NATO’s Article 5, thereby deterring Chinese economic aggression rather than initiating a trade war.
Cha described China as an unreliable partner for South Korea, accusing Beijing of failing to curb North Korea's nuclear activities and ignoring UN sanctions. He emphasized that no single country in the region can effectively counter China alone, but collectively the countries possess enough leverage. The pact would treat coercion against one member as coercion against all, triggering automatic retaliation, which could impose real costs on Beijing and make it reconsider its pressure tactics.
South Korean President Lee Jae Myung has sought balanced relations with both China and the U.S., exemplified by his recent summit with Chinese President Xi Jinping. However, Cha believes this amicable approach is unlikely to withstand the fallout from the submarine deal, as China has historically retaliated against South Korea economically in response to geopolitical disputes. He called for stronger trilateral cooperation between South Korea, the U.S., and Japan, highlighting their substantial trade with China and leverage over key Chinese imports worth over $23 billion.
Cha urged the Trump administration, which holds the G7 presidency in 2027, to lead efforts in forming this economic deterrence pact and to avoid measures like tariffs on allies. He recommended that Trump explicitly oppose China's economic pressure tactics during his upcoming visit to Beijing in April to deter further coercion against allies, particularly South Korea, following the submarine project agreement.
Gwangju named Korea's first citywide autonomous driving test zone to challenge U.S., China leads
Joongang Ilbo | English | News | Jan. 23, 2026 | UndeterminedTech Development/Adoption
Gwangju Metropolitan City has been designated as South Korea's first citywide autonomous driving test zone to accelerate AI-powered vehicle development and close the technology gap with the United States and China. The Ministry of Land, Infrastructure and Transport announced that about 200 self-driving vehicles will operate on public roads across Gwangju starting in the second half of 2026. This initiative is part of a broader economic growth strategy aimed at boosting the country's competitiveness in autonomous driving by utilizing the entire city as a large-scale testing environment, similar to trials in San Francisco and Wuhan.
The government plans to appoint the Korea Automobile Testing and Research Institute to manage the program and will select about three autonomous driving companies through an open call by April. These companies will receive test vehicles based on their technical capabilities, beginning with autonomous driving accompanied by safety drivers and moving toward fully driverless operations after annual reviews. A standardized system will collect and preprocess driving data to train AI, with support for large-scale GPU-based training at the national AI data center. Additional measures include remote monitoring, safety management systems, and a specialized insurance product to mitigate compensation risks from accidents during testing.
South Korea has already implemented advanced regulatory frameworks, including safety standards for Level 3 conditional automation and performance certification for Level 4 automation, but has been limited to smaller testing zones until now. Officials emphasized that larger-scale real-road testing is essential for AI systems that learn from extensive data and make independent driving decisions. Land Minister Kim Yun-duk noted the urgent need to catch up with global leaders, characterizing Korea's current autonomous driving technology level as elementary compared to more mature development in the U.S. and China.
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