Real GNI Growth Hits Historic High.

• Up 9.2% quarter-on-quarter—the highest since 1960.
• President Lee Jae-myung shared the Bank of Korea’s announcement on Facebook, emphasizing, “Only when achievements are felt in people’s lives and daily routines can we truly say ‘there’s no substitute for Korea.’”
• In reality, year-on-year comparisons are more commonly used to evaluate growth rates. Quarter-on-quarter figures can be skewed by base effects if the previous quarter’s performance was weak, so trends matter more than standalone percentages.
• Even year-on-year growth hit 13.0%—the highest since 1988.
• The Bank of Korea attributed this to “improved terms of trade and increased net primary income from abroad.” Essentially, Koreans earned significantly more overseas.
• Kim Hwa-yong (Bank of Korea Head of National Accounts), projected, “Per capita GNI (national income) could approach $40,000 this year.”
• Related Link.

“Surpassed by Taiwan and Japan.”.

• Chosun Ilbo published a slightly skewed article. While GNI did increase, in dollar terms it grew by only 0.3%. It has been stuck at $30,000 for 12 years.
• The exchange rate is to blame, but depending on where the focus lies, it can be framed as a historic growth rate or downplayed as being overtaken by Japan. There are many other indicators, yet they chose to highlight dollar-adjusted GNI on the front page.
• Related Link.

GDP Growth Rate at 3.8%.

• Real GDP growth was 3.8% year-on-year and 1.8% quarter-on-quarter.
• Nominal GDP growth was 17.1% year-on-year and 10.5% quarter-on-quarter—all record figures.
• Projections suggest the national debt ratio will fall to the mid-40% range.

This Year’s Growth Rate at 15.3%?

• Citibank Korea has issued a bold forecast. Based on nominal GDP, it’s the highest since 1995.
• The projection reflects a real GDP forecast of 3.0% and a GDP deflator of 11.9%, accounting for inflation rates and other factors.

KOSPI Plunges 8%, Then Surges 8% the Next Day.

• It recovered to 8,096.93.
• The sidecar mechanism has been triggered 23 times this year alone.
• Yesterday, U.S. markets seesawed. The S&P 500, Dow, and Nasdaq closed at -0.26%, 0.17%, and -0.97% respectively.
• Broadcom, which led last week’s Black Friday rally, rebounded 2.8% on Monday but fell 1.1% yesterday. It had initially dropped 5.4% before partially recovering.

What Matters Now.

Jeong Cheong-rae Goes Missing.

• Lee Jae-myung (President) departed for the G7 summit. Jeong Cheong-rae (Democratic Party leader) and Han Byung-do (Democratic Party floor leader) did not attend the airport send-off.
• Kim Min-seok (Prime Minister) did. This is the first time Jeong Cheong-rae has not appeared for the president’s departure—and the first time Kim Min-seok has.
• The Blue House explained, “We scaled back the send-off due to domestic and international circumstances,” but it amounts to an explicit instruction to Jeong Cheong-rae not to come.
• When reporters asked, “Is this a Jeong Cheong-rae snub?” Kang Hoon-sik (Blue House Chief of Staff) replied, “We take the flawed voting issue seriously and aimed for minimal attendance rather than a mass exodus.”
• A Democratic Party official interviewed by Kyunghyang Shinmun said, “The president clearly signaled, ‘I’m not with Jeong Cheong-rae—I’m with Kim Min-seok.’”

“No Hasty Ouster for Jang Dong-hyeok.”.

• These remarks emerged during the People Power Party’s floor leader primary debate.
• Seong Il-jong (People Power Party lawmaker) said, “It’s clear he must take responsibility, (but) forcing him out is not advisable.”
• Jeong Jeom-sik (People Power Party lawmaker) said, “It shouldn’t appear as a party split—it must be handled quietly.”
• Kim Do-eup (People Power Party lawmaker) proposed, “Let’s build a party that won’t be called a pro-Yoon faction again.”
• The Hankyoreh analyzed, “Jeong Jeom-sik, seen as an original pro-Yoon figure, has a high chance of winning.”
• In closed-door discussions, many reportedly argued against rushing Han Dong-hoon’s (independent lawmaker) return to the party.
• Related Link.

Jang Dong-hyeok’s Final Card: The Election Fraud Conspiracy.

• Jang Dong-hyeok (People Power Party lawmaker) claimed the exact tie in votes between Yu Jeong-bok (People Power Party candidate) and Park Chan-dae (Democratic Party lawmaker) in Incheon’s Songdo 1st and 2nd districts was a “1 in 590 million probability.”
• The National Election Commission explained, “It was a coincidental outcome.”
• A People Power Party official met by Kyunghyang Shinmun said, “It’s an attempt to shift focus and dispel responsibility for the election defeat.”
• Chosun Ilbo also distanced itself. In an editorial, it noted, “They can’t be unaware that a revote is realistically impossible” and added, “No one is fooled by their attempt to cling to leadership by riding the revote narrative.”
• Related Link.

“Are They Saying Oh Se-hoon Should Step Down?”.

• Oh Se-hoon (Seoul Mayor) dismissed the claim, stating, “If procedural flaws are not severe enough to alter the election outcome, a revote cannot be justified.”
• Park Jeong-ha (People Power Party lawmaker) went as far as to say, “What practical benefit would a revote serve?”

North Korea’s Russia-Security, China-Economy: South Korea Sidelined.

• Security with Russia, economy with China—that’s the phrase.
• Xi Jinping (Chinese President) visited Pyongyang and never once mentioned denuclearization. Speculation arises: Is China tacitly accepting North Korea’s nuclear status?
• Some interpret the presence of No Kwang-chol (North Korean Defense Minister) and Dong Jun (Chinese Defense Minister) as signaling expanded military cooperation.
• Hong Min (research fellow at the Korea Institute for National Unification) analyzed, “North Korea’s status has shifted from a managed entity to a partner in addressing issues, coordinating agendas, and countering the U.S.”

Deep Dive.

Pushing Ahead with the Special Prosecutor Bill for Election Fraud.

• Lee Jae-myung (President) stating, “If there’s wrongdoing, it should be canceled; if not, leave it as is,” became a strong signal.
• Jeon Yong-gi (Democratic Party lawmaker) said, “Please view it as correcting misinformation.”
• Opposition is also significant. Kim Young-jin (Democratic Party lawmaker) stated, “We must thoroughly discuss why the special prosecutor bill was delayed.”
• Lim Mi-ae (Democratic Party lawmaker) criticized, “It has fueled suspicions that the Democratic Party is attempting to abuse power.”

“Yoon Again” Occupies Jamsil Amid Vote Protest Stalemate.

• Protests against the ballot shortage crisis enter their fifth day.
• Participation dwindles as “rigged election” and “Yoon Again” slogans emerge. Numbers peaked near 40,000 last weekend but fell to around 300 yesterday. American flags and “Stop the steal” chants have multiplied.
• The Supreme Prosecutors’ Office ordered the Seoul Central District Prosecutors’ Office to establish a joint police-prosecutor investigation headquarters.
• Courts ruled to preserve ballot boxes as evidence.
• Separately, 12 universities will issue political declarations today.

Why Surplus Tax Revenue Isn’t Easy to Spend.

• Planning and Budget Office is reviewing a plan to create an independent fund.
• Ministry of Economy and Finance is reviewing a plan to funnel surplus tax revenue into a sovereign wealth fund.
• The National Finance Act mandates that 40% of global surplus be allocated to local grants and 30% to public fund repayment. This means surplus tax revenue is already earmarked.
• Woo Suk-jin (Myongji University professor) pointed out, “There is a need to consider a system that allows not only reinvesting sovereign wealth fund profits but also circulating them for social safety nets.”
• The Hankyoreh proposed, “A surplus profit-sharing plan similar to the U.S. CHIPS Act—which requires up to 75% of excess profits to be shared with the government—should be discussed.”

This Year’s Tax Revenue to Surge by 50 Trillion Won.

• Next year’s budget is projected to exceed 800 trillion won.
• This year’s tax revenue will increase by 45 trillion won to 435 trillion won, and next year, with corporate tax revenue rising by 120 trillion won, national tax income is expected to reach 565 trillion won.

Student Numbers Fall, But Education Grants Rise Automatically.

• Education grants, tied to 20.8% of domestic taxes, grew from 43 trillion won in 2016 to 76 trillion won this year.
• Student numbers fell from 5.96 million to 4.92 million over the same period.
• If this trend continues, per capita GDP will increase 3.8-fold from 2020 to 2060, while education grants will surge 5.5-fold.

Real Estate Politics: The Unbeaten Path.

• Choi Han-soo (Kyungpook National University professor) noted, “As the ‘Seoul apartment dominance’ phenomenon accelerates, the entire city could transform into a political Gangnam.”
• In fact, analysis of Seoul mayoral election results showed that the Democratic Party’s vote share dropped by 3 percentage points for every 100 million won increase in the average publicly announced price of administrative districts.
• Choi Han-soo identifies two limitations of the comprehensive real estate tax.
• First, it cannot serve as a market stabilization tool because it fails to keep pace with real-time fluctuations in housing prices.
• Second, since tax brackets are based on the number of properties rather than asset value, achieving horizontal equity remains challenging.
• “Without proven effectiveness, expanding the tax base risks clashing with demands from core supporters while perpetuating the status quo,” he added.
• Related Link.

Another Take.

Will Trump Abandon Taiwan?

• Pete Hegseth (U.S. Secretary of Defense) said at last year’s Singapore forum, “A Chinese invasion of Taiwan could be imminent.” Yet he made no mention of Taiwan at last week’s forum.
• The atmosphere shifted after Donald Trump (U.S. President) and Xi Jinping (Chinese President) met.
• Ryan Hass (Brookings Institution China Center Director) analyzed that Beijing gained three things: the impression that the U.S. prioritizes China over Taiwan, the perception that Taiwan-related decisions pass through Beijing, and uncertainty in future Taiwan policy.
• Trump’s remark that selling weapons to Taiwan is a “good bargaining chip” is ominous. While he approved $11.1 billion in arms sales last year, a $14 billion package this year remains pending. Some speculate it will be delayed until September, when Xi Jinping is expected to visit the U.S.
• Taiwan’s greatest fear is Trump suddenly calling Tsai Ing-wen (Taiwan President) to pressure her not to declare independence. There are concerns a “Zelenskyy moment” could unfold in Taiwan.
• Related Link.

“Bibi, You’d Better Be Careful.”.

• “Or you’ll end up alone.”
• Bibi is the nickname for Benjamin Netanyahu (Israeli Prime Minister).
• Though tensions once soured to the point where Donald Trump (U.S. President) called him a “maniac,” efforts are now underway to placate him.
• Iran has warned it will resume hostilities if Israel attacks Lebanon.
• After Israel struck Lebanon, Trump pressured Netanyahu with two calls, and the strikes have paused—for now.
• Analysts suggest Trump is losing control over Netanyahu.
• The U.S. and Iran have also exchanged blows: an Iranian drone shot down an American Apache helicopter, prompting U.S. strikes on Iranian radar bases.
• Related Link.
• Related Link.

Seek Out the Companies Selling Pickaxes and Shovels.

• It’s not just semiconductors that are thriving. AI infrastructure-related companies are rising globally. The Financial Times called them “unlikely winners.”
• Caterpillar, a construction equipment firm, manufactures generators for data centers.
• Ford’s stock soared after it announced plans to produce battery storage systems for data centers.
• Corning, which makes iPhone-strengthened glass, saw its stock jump 270% after signing fiber-optic supply contracts with Nvidia and others.
• Comfort Systems USA, an air-conditioning manufacturer, saw its stock surge 260% over a year as it supplied cooling systems for data centers.
• Alex Kodors (Deloitte analyst) analyzed, “Manufacturing companies with over 100 years of history are finding new vitality by catching up with the AI era.”
• Hyper-scalers like Alphabet, Microsoft, Amazon, Meta, and Oracle plan to pour $700 billion in investments this year alone.
• As data center orders increase, outdated gas turbines are now in short supply. With rising power demand, the U.S. alone has a backlog of seven years’ worth of orders.
• Siemens Energy recorded its highest-ever order volume in the first quarter of this year.
• Wärtsilä, which makes ship engines, and Howmet, which supplies parts to Boeing, have also entered the data center business. It’s to the point where people say, “Anything that can spin an engine ends up in a data center.”
• Will this trend continue? Bain & Company analyzed, “To justify this scale of investment, they need to generate $2 trillion in annual sales.”
• Related Link.

A $9 Trillion Bet: How Much Must Be Won to Avoid Loss?

• The Financial Times estimates that $9 trillion will be poured into AI-related infrastructure investments by 2030.
• According to the Wall Street Journal, bonds issued by five hyperscaler companies alone have already reached $159 billion this year. The phase of borrowing to invest due to insufficient cash flow has begun.
• John Polidori (Financial Times columnist) analyzed, “Assuming a 10% return on a $9 trillion investment, $900 billion in annual profits would be required. If the profit margin is reduced to one-third, $2.7 trillion in annual sales would be needed.”
• An MIT analysis found that 95% of corporate AI projects fail. Mark Zuckerberg (Meta CEO) said, “We’re spending money based on the most optimistic scenarios.” Dario Amodei (Anthropic CEO) warned, “If the numbers don’t add up, we could go bankrupt.”
• The problem is OpenAI. Big tech firms like Google, Meta, and Amazon have solid core businesses and could survive even if their investments fail, but OpenAI must go all-in on AI.
• The landscape could shift if edge AI—functioning properly on local devices—emerges. There may be evaluations that Apple’s cautious withdrawal was a wise choice.
• Related Link.
• Related Link.

Scrapping Fairness Reviews Amid Flood of Complaints.

• The Democratic Party’s story. The revised Broadcasting Act proposed by Choi Min-hee (Democratic Party lawmaker) states, “Fairness is an abstract and relative concept that can vary depending on individuals or groups,” and “there are concerns that fairness reviews could be conducted with arbitrary criteria.” The bill was drafted from the perspective that “they infringe on the independence and freedom of broadcasting.”
• The bill, proposed last December, remains stalled in the Legislative and Judiciary Committee.
• Yet from December last year to May this year, the Democratic Party filed 817 complaints with the Korea Communications Standards Commission and the Election Broadcasting Review Committee, requesting reviews for fairness violations.
• Lee Jae-myung (President) also asked Kim Jong-cheol (Chairperson of the Broadcasting and Media Communications Commission) during a State Council meeting, “Are there sanctions if broadcasters lose neutrality or lack fairness, acting like party mouthpieces?” It was a scene where the president criticized the system the Democratic Party claims to want to abolish for not functioning properly. Lee Jae-myung pointed out, “There are cases where it goes too far, but I’ve never heard of any sanctions being imposed.”
• Related Link.

The Fix.

What If Samsung Created a Social Investment Fund?

• Samsung Electronics didn’t grow alone. Tax benefits, infrastructure support, and national R&D investments—today’s Samsung exists because society poured resources into it. If it generates hundreds of trillions in profit, society naturally has a claim.
• Lee Sang-heon (ILO Chief Economist) proposed allocating around 5 trillion won from its 100 trillion won profit into a social investment fund.
• It could support subcontractors or invest in education and productivity innovation for SME workers. Lee emphasized, “If Samsung ever faces difficulties, this fund could support the company.”
• The key is investment, not dividends. “It’s not about giving money—it’s about creating opportunities, generating jobs, and supporting education in a cycle that builds greater energy and synergy.”
• Related Link.

Halving Youth Suicides by 2035.

• 8 per 100,000. Last year alone, 396 teenagers took their own lives.
• 430,000 adolescents visited hospitals for mental health issues last year.
• The government plans to strengthen school education, establish a crisis detection system, and increase counseling staff.
• The Korean Teachers and Education Workers Union criticized, “The policy stops at expanding counseling, treatment, and management measures while leaving the educational reality that drives extreme competition untouched.”

Transitioning to a Voluntary Recruitment System.

• Officers now account for 40% of active-duty personnel. The Ministry of National Defense plans to increase this ratio to 63% by 2040, shifting toward a professional military structure.
• Korea’s military-age population shrank from 332,000 in 2019 to 257,000 in 2022. By 2043, it will fall to 120,000.
• As conscription declines, the plan is to expand technology-focused combat specialists.

ICYMI.

A Citizen Called 4,483 Times.

• One complainant submitted 1,678 documents over a single year.
• That’s why the National Tax Service formed a dedicated team to protect staff from malicious complaints.
• One complainant even threatened to stab tax office staff with a knife 43 times.
• Jang Yoon-ha (Head of the National Tax Service’s Employee Protection Legal Team) said, “Even physically strong male employees have developed panic disorders after 10 years of harassment.” The team has imposed entry restrictions on repeat offenders.
• The system was created after Commissioner Lim Gwang-hyun pledged, “The organization will take direct responsibility for protecting employees.”
• Related Link.

ARMY Descending on Busan.

• BTS has concerts in Busan on the 12th and 13th. An estimated 190,000 foreigners will arrive via Incheon Airport over four days. This represents an increase of over 10,000 daily arrivals compared to last month’s average of 38,000.
• From January to April this year, arrivals totaled 710,000—a 21% increase over the same period last year.
• Incheon Airport has expanded immigration staffing by up to 88% to handle the surge.

Worth Reading.

“Jensen Huang Should Restraint Stock Advice.”.

• This is a critique by Shery Ahn (Bloomberg columnist). It refers to Jensen Huang (NVIDIA CEO)’s recommendation to “buy the dip” after his visit to Korea, saying, “We, in a state of information vacuum, cannot know if the stock price rise aligns with actual increases in chip orders or profits.”
• “To avoid repeating a dot-com bubble collapse, what this tech mogul needs is not excessive optimism but concrete guidance,” she noted.
• Related Link.

Daegu’s Choice After 32 Years at the Bottom of Per Capita GRDP.

• Daegu’s budget is 11.7 trillion won, but the mayor’s discretionary spending is only around 0.2 trillion won. Without central government funding, no projects can be launched.
• Daegu’s per capita GRDP (gross regional domestic product) was 31.37 million won in 2024—half of Seoul’s and the lowest among metropolitan areas.
• So desperate were Daegu citizens that they asked Kim Bu-gyeom (Democratic Party mayoral candidate), who pledged to secure more budget, “Will you keep your promise even if you lose?” It’s that hard.
• In the last presidential election, Lee Jae-myung (President) won 23.2% of the vote in Daegu, while Kim Bu-gyeom lost despite securing 45.1% this time.
• “Daegu has an 8-lane Dalseong-daero, but while shops on the first floor still operate, every other second-floor unit has a ‘For Rent’ sign. Go deeper into the alleys, and all are vacant,” said Lee Jin-soo (Director of Strategy for Kim Bu-gyeom’s campaign) at a National Assembly forum.
• “To conservative Daegu voters, Kim Bu-gyeom was like a ‘big brother who returned from Seoul.’ They wondered what gifts he’d bring.”
• Then two bombs dropped: one was the special prosecutor bill for indictment cancellation, and the other was the Starbucks boycott movement. Lee Jin-soo said, “It was a massive blow.” Kim avoided mentioning internal conflict, focusing only on how voting for him would improve things—avoiding party-line or regional voting.
• Lee Jin-soo emphasized, “Voters universally ask, ‘Which choice brings me better results?’ The Democratic Party needs deep reflection on this for future elections.”
• Related Link.

Stolen Wages for 8.7 Million Subcontracted Workers.

• When the Korean Confederation of Trade Unions calculated hourly wages for special-employment workers, they found: 6,879 won for proxy drivers, 7,864 won for delivery riders, and 8,164 won for inspection officers. These are net earnings after accounting for preparation, waiting, and travel time.
• Last year’s minimum wage was 10,030 won.
• When unpaid weekly rest allowances and severance pay are factored in, the “stolen wages” increase further.
• According to Park Jung-hoon (Vice Chairman of the Public Transport Workers’ Union), applying this year’s minimum wage of 10,320 won, adding business expenses, social insurance, weekly rest allowances, and severance pay, delivery drivers should earn 22,709 won, delivery riders 18,618 won, proxy drivers 21,713 won, and inspection officers 21,186 won to meet minimum wage standards.
• The Hankyoreh editorialized, “Measures must be devised to rescue subcontracted workers from long hours and low wages.”
• Related Link.

Lee Jae-myung’s Five Flawed Real Estate Diagnoses.

• Chosun Ilbo dissected President Lee Jae-myung’s remarks at the press conference point by point.
• First, he claimed “the disappearance of jeonse is a normalization process,” but the issue is the speed. Without sufficient public rental housing or alternatives, reduced jeonse contracts increase housing cost burdens.
• Second, he implied “the jeonse market breeds jeonse fraud,” but villas and apartments must be analyzed separately. The jeonse loan-to-value ratio for Seoul apartments is around 58%.
• Third, he criticized “multiple homeowners as the problem,” but the top 100 owners’ 4,115 properties were purchased at an average of 160 million won—likely villas or regional homes, not Seoul apartments. This is not a problem solvable by selling multiple homeowners’ properties.
• Fourth, his diagnosis that “jeonse loans cause rising home prices” has merit, but blocking jeonse loans would make it harder for low-income groups to become independent.
• Fifth, his claim that “jeonse tenants bought homes, reducing demand” misreads reality. In Seoul, those seeking jeonse still vastly outnumber available properties. The jeonse supply-demand index reached 182.7—the highest in five years and five months.
• Related Link.