■ The Korean economy exhibits signs of limited improvement, primarily in the construction industry, amid escalating uncertainties. 　 　 　 　 ○ Semiconductor production and exports continue to show robust growth, with related equipment investment maintaining its upward trend. 　 　 ○ However, goods consumption and construction investment remain subdued, constraining the recovery of domestic demand. 　 　 　 　 - Goods consumption continues to slide while delinquency rates among sole proprietorship businesses remain on an upward trend. 　 　 　 - Despite improving leading indicators related to construction, the value of construction completed continues to recede, while employment conditions are experiencing modest adjustments, particularly in the construction industry. 　 　 　 　 ○ Meanwhile, the deteriorating global trade environment following President Trump’s election could adversely affect Korea’s export performance. 　 　 　

This issue delves into the intensifying North Korea-Russia relations and their economic, military, and diplomatic ramifications. Following the "Comprehensive Strategic Partnership Agreement," North Korea has deepened political, economic, and military cooperation with Russia. This alliance, driven by the protracted Russia-Ukraine conflict, has enabled North Korea to secure foreign currency and rejuvenate its defense industry through arms exports and labor deployment. Russia, in turn, supplies military technology and economic aid, advancing North Korea's defense modernization and provocation capabilities. Nevertheless, Russia is unlikely to supplant China as North Korea's primary economic partner, given China's stable trade relations and superior qualitative contributions to economic growth. Militarily, North Korea's collaboration with Russia accelerates its strategic weapons development and offensive capabilities. However, Russia is expected to temper its support to balance international criticism with its wartime priorities. As the incoming Trump administration raises the prospect of a ceasefire in Ukraine, South Korea must ensure active participation in U.S.-Russia discussions on Korean Peninsula issues and mitigate the security risks posed by North Korea's expanding defense capabilities.

■ The Korean economy maintains favorable export momentum, led by ICT products, yet domestic demand recovery is constrained by sluggish construction investment. 　 　 　 　 ○ The manufacturing industry maintains its recovery trend as ICT exports continued their growth momentum 　 　 　 　 - Although export growth moderated due to base effects, the overall momentum remained favorable, led by ICT products 　 　 　 　 - Consequently, the inventory-to-shipment ratio decreased, particularly in semiconductors, and the average capacity utilization rate remained elevated. 　 　 　 　 ○ However, despite the upward trend in equipment investment, the sustained weakness in goods consumption and construction investment continues to constrain domestic demand recovery. 　 　 　 　 - The substantial increase in semiconductor equipment investment suggests that the effects of strong export performance may gradually spill over into domestic economic conditions. 　 　 　 　 - By contrast, goods consumption continued its downward trajectory, while service consumption maintained modest growth. 　 　 　 　 - Some leading indicators related to construction improved, yet the construction market remains contracted, as indicated by the value of construction completed continuing to post declines. 　 　 　 　 - Accordingly, the inflation rate continues to decelerate.

The 2024 APN Conference successfully ended The 2024 Asia-Pacific PPP Practitioners’ Network (APN) was held in Seoul, Korea, at Nine Tree ROKAUS Seoul Yongsan, from October 22 to October 23. The event was co-organized by the Korea Development Institute (KDI), the World Bank Group, the Asian Development Bank (ADB), and the Asian Development Bank Institute (ADBI), and was sponsored by the Ministry of Economy and Finance (MOEF) of Korea. The conference was attended by infrastructure and Public-Private Partnership (PPP) practitioners, including senior-level officials from across Asia and the Pacific, professors and experts. This year, around 40 public sector officials working in infrastructure areas from Australia, Azerbaijan, Cambodia, , India, Indonesia, Japan, Kazakhstan, Kyrgyzstan, Lao PDR, Malaysia, Mongolia, the Philippines, Solomon Islands, Thailand, Uzbekistan, and Vietnam participated in the event. The APN was first held in 2010, and this year was its 12th event. The goal of the conference is to provide an opportunity to connect with PPP experts, participants from academia, and international organizations to promote peer learning and to act as a platform for regional and global PPP networks.  Entitled, ‘Advancing Sustainable and Resilient PPPs in a Dynamic Landscape’ this year’s conference tried to delve into the evolving landscape of PPPs, reflecting on past achievements, current challenges, and future opportunities. The conference sessions covered a wide array of topics including Korea's 30-year journey with PPPs, the integration of Quality Infrastructure Investment principles, private investment trends and regulatory reforms in low-and-middle-income countries, climate-smart solutions offered by ADB, and the advantages and challenges of unsolicited project proposals. Each session was curated to address key issues, present real-world case studies, and facilitate knowledge sharing among participants. The conference began with opening remarks by Hyungtai Kim, Senior Vice President and Chief Management Officer of KDI, followed by welcome remarks from Ji Hoon Oh, Director of PPP Policy Division of MOEF, and Byungsik Jung, Deputy Dean of ADBI.  Senior Vice President Kim, emphasizing that infrastructure is the backbone of a resilient society and equitable economy, expected that the conference be an opportunity for advancing infrastructure investment through PPPs amid today’s multifaceted socio-economic challenges including geopolitical tensions, fiscal constraints and climate change surrounding PPPs.   The first session, “Korea: Reflecting on 30 Years of PPP and Charting the Path Forward,” (moderated by Kiwan Kim, Executive Director of the Public and Private Infrastructure Investment Management Center (PIMAC) of KDI) discussed how the Republic of Korea came to expand private sector involvement in infrastructure and explored ways to respond to new challenges. The session focused on the Korean case of PPP policy direction considering changing dynamics of the PPP projects such as aging demography of the country, while also sharing the experience from the Philippines. Session two, “Quality Infrastructure Investment in PPPs: Towards Sustainability and Resilience,” (moderated by Bo Young Jang, Senior Capacity Building and Training Specialist at ADBI) explored discuss how to maximize the economic, social, and environmental impact of PPP projects, aiming to achieve inclusive, sustainable, resilient infrastructure development in line with SDGs. The presenters discussed the integration of Quality Infrastructure Investment (QII) concepts and principles through the life cycle of PPP projects and shared Japan and Indonesia’s cases demonstrating how PPPs can address social challenges such as climate change, inequality, and poor governance.  Session three, “Unlocking Infrastructure Investment: PPP Trends, Reforms, and PPP Resources for Practitioners,” started with a presentation by Deblina Saha, Senior PPP Specialist of the World Bank and followed by discussions on current trends in private investment in infrastructure in developing countries and how regulatory reforms can spur more investments. Governments are increasingly looking to PPP options to mitigate and adapt to climate changes. Therefore, in session four, “Climate Change Considerations for PPPs,” (moderated by Adrian Torres, Director of the Office of Markets Development and PPP at ADB) explored climate change considerations across technical, financial and contractual aspects of PPP transactions.  To maximize the creativity and innovation from the private sector, unsolicited project proposals (USPs) are increasingly adopted in infrastructure development. Session six, “Advantages and Challenges of Unsolicited Project Proposals,” (moderated by Takkyung Kim, Director of PPP Division at PIMAC, KDI) sought to highlight potential advantages and necessary precautions for successful implementation of USPs, focusing on UPS experience in Korea and Australia. The last session marked how the carbon markets have evolved and can impact the PPP projects in Asia. In session six, “Leveraging Carbon Markets for PPPs in Asia,” (moderated by Adrian Torres, Director of the Office of Markets Development and PPP at ADB), introduced the carbon market rules aligned with the Paris Agreement and how we should anticipate the changes in the revenue streams of PPP projects can adjust throughout the lifecycle of infrastructure with private investments.   For the country roundtable, representatives from Azerbaijan, Cambodia, and Malaysia shared current state of PPPs and ways to promote PPP projects in respective countries. All participants shared his or her opinions based on the diverse backgrounds and experiences, actively delving into the conference's theme of PPP investment and issues surrounding climate change.     

KDI Global Knowledge Exchange and Development Center Completes the Sustainable Smart City Capacity-Building Workshop “The KDI Global Knowledge Exchange and Development Center (GKEDC) successfully hosted the 『2024 KDI GKEDC Capacity-Building Workshop on Sustainable Smart Cities』from October 27 to November 2, 2024.” The capacity-building workshop is designed to provide the key partner countries, including ASEAN member states, Hungary, and Saudi Arabia, with opportunities to learn about smart city policies and technologies. It highlighted South Korea's advanced smart city practices and was tailored to meet each country's policy needs. Day 1: Orientation and Knowledge Exchange on Smart City/Smart Transportation/Smart Security On October 28, the participants engaged in lectures by Professor Joon Park of the University of Seoul and Deputy Director Yeon Shin of the Ministry of Land, Infrastructure and Transport to gain insights into smart city policies. They also experienced the autonomous driving bus at the Blue House and learned about smart security technologies. The Royal Commission for Makkah City in Saudi Arabia expressed keen interest in autonomous driving technologies and discussed possibilities for future collaboration. Day 2: Knowledge Exchange on Smart Security and Smart Environment On October 29, the participants met Arad Networks and visited the Disaster Safety Division of the Gangnam District Office to learn about smart security and advanced CCTV analysis technologies. They also explored smart environmental technologies at SuperBin and K-Water's Hwaseong Reservoir. CEO Jungbin Kim of Superbin shared insights on smart factory operations. Manager Jongbok Lee of K-Water highlighted collaboration opportunities in smart water management and emphasized the importance of sustainable technologies. Day 3: Project Concept Proposal (PCP) Seminar On October 30, the participants attended the KSP Project Concept Proposal (PCP) Seminar. The seminar began with welcoming remarks by Executive Director Dongsoo Kang of the KDI GKEDC and Dato’ Mohd Zamruni Khalid, the Malaysian Ambassador to Korea. During the session, project proposals* submitted by each participating organization were further refined with feedback from expert advisors. Following the evaluation, the ‘Developing Resilient, Innovative, Vibrant, and Efficient Smart Local Governments Nationwide (DRIVEN) Program’ by the Philippine Department of the Interior and Local Government was selected as the outstanding proposal. The finalized proposals will be submitted through diplomatic channels. * Project Proposals: Developing Resilient, Innovative, Vibrant, and Efficient Smart Local Governments Nationwide (DRIVEN) Program (Philippine Department of the Interior and Local Government); Cambodia National Smart City Policy Development (Cambodian Ministry of Interior); Smart Low-Carbon Urban Development for Sustainable Communities in Malaysia (Malaysian Ministry of Urban Development); Climate-Smart Evacuation Centres for Sustainable Cities (Philippine Department of the Interior and Local Government); Developing a Sustainable and Efficient Metro System for Makkah: Enhancing Urban Mobility and Reducing Congestion (Royal Commission for Makkah City, Saudi Arabia); Indonesia National Artificial Intelligence Center (Indonesian Ministry of Communications and Information Technology); Adaptation of Local Technology Towards Smart Cities Realisation: Smart Building for Government Office in Putrajaya (Malaysian Ministry of Urban Development)   Day 4: Knowledge Exchange Day (KED) Conference and Exhibition Tour On October 31, the participants attended the KED Conference at the KDI GKEDC. They explored the future of digital twin technology with presentations from Hyundai Motor Company, Naver, etc. Additionally, they engaged with global technology trends through sessions by organizations such as UNIDO and African and Asian Development Banks. During the curated exhibition tour, the participants delved into the development of digital twin technology and experienced its real-world applications through interactive exhibits.     Day 5: KED Business Meetings and Cultural Night On November 1, the participants visited Naver in Seongnam to learn about smart city technologies and discuss potential collaborations. They then conducted business meetings with LG CNS, Newbility, S.U.M., and PiQuant, exploring cooperation in smart cities, environments, security, and logistics sectors. The program concluded with the KED Cultural Night, where participants enjoyed a talk show and musical performances, fostering active networking and celebrating cultural exchange.     “Strengthening Practical Policy Discussions and Enhancing Collaborative Foundations through Tailored Programs” The Sustainable Smart City Capacity-Building Workshop was tailored to meet the specific policy needs of key partner countries, including four ASEAN nations, Hungary, and Saudi Arabia. The program facilitated active discussions on innovative ideas and policy proposals related to smart cities, effectively enhancing the participants' practical capabilities. Representatives from each country expressed their sincere gratitude to the KDI GKEDC for hosting this workshop. Executive Director Dongsoo Kang stated, “We hope this capacity-building workshop will significantly contribute to the development of smart cities in each participating country and further strengthen cooperation with the Republic of Korea.” Written by: Minje Joo, Senior Research Associate, Global Knowledge Cooperation Team 2,  02-6312-4082, jmj89628@kdi.re.kr  

“2024 Knowledge Exchange Days (KED)” successfully took place at the GKEDC The inaugural 2024 Knowledge Exchange Days (KED) took place successfully from October 31 (Thu) to November 1 (Fri), hosted by the Ministry of Economy and Finance (MOEF) and organized by KDI and GKEDC. Under the theme "Digital Transformation for Better Lives," this first-ever event offered a rich array of programs, including a conference, knowledge forums, a special exhibition, education programs, and a cultural night. It provided a vibrant platform for both domestic and international participants to build networks and explore practical solutions. Conference 「Digital Transformation for Better Lives」 The main conference, which highlighted the first day of the 2024 KED, brought together leading international organizations, private enterprises and public institutions to engage in a multifaceted discussion on digital transformation across economic and social sectors.     In the opening ceremony, 1st Vice Minister of Economy and Finance, Beomseok Kim, emphasized in his opening remarks that "To emerge as a global pivotal state, we must not limit ourselves to internal concerns but pursue collective efforts through knowledge exchange to address global challenges.” Following this, KDI President Dong Chul Cho highlighted the essential role of think tanks in his welcoming remarks, stating that “Think tanks should foster international knowledge exchange and act as bridges linking domestic and global discussions to devise solutions for pressing global issues.” Wencai Zhang, Managing Director and Chief Administrative Officer of the World Bank Group (WBG), send a video message remarking that "Digital transformation is not merely about technological change but a pathway to achieving the WB's mission of ending poverty on a livable planet,” and expressed a commitment to expanding multi-dimensional partnerships with Korea. [Keynote] The keynote speeches featured Daeje Chin, Former Minister of Information and Communication, and Amy Doherty, Chief Information Officer and Vice President, Information & Technology Solutions of the WBG, who addressed the role of digital transformation and future challenges. Former Minister Chin described the next decade as the ‘Era of AI Innovation,’ stressing that "To survive in the AI-driven innovation competition, enterprises must relentlessly pursue change.”   [Session1. Illuminating Innovative Avenues] Session 1, chaired by Sang Kyun Cha, Founding Dean of Graduate School of Data Science, Seoul Nat'l Univ, brought together panelists from Hyundai Motor Company, CJ Logistics, Naver, and Yanolja. The session focused on exploring digital solutions designed to maximize positive outcomes in productivity and efficiency. [Session2. Casting Light for Change] Session 2, chaired by M. Jae Moon, Underwood Distinguished Professor, Yonsei Univ., featured experts from POSCO, K-water, Medical IP, and the Korea Social Security Information Service. The panel delved into strategies to minimize the everyday challenges across socioeconomic sectors and to ensure benefits of digital transformation are equitably distributed worldwide. [Session3. Navigating Digital Challenges Around the Globe] Session 3 featured an esteemed panel including Maengho Shin, Head of UNIDO ITPO Korea, Donghyun Park, Economic Advisor at the Asian Development Bank (ADB), Namawu Alolo Alhassan, Division Manager, Knowledge Management & Information Services of the Afican Development Bank (AfDB), and Sheila Jagannathan, Senior Consultant of the AfDB. Jason Allford, Special Representative of WB Korea Office served as the moderator, guiding discussions on each institution's digital transformation initiatives and future directions. [Roundtable. Lighting Up the Way Forward: Digital Transformation for Sustainable and Inclusive Future] Following roundtable discussion, led by Dongsoo Kang, Executive Director of the KDI GKEDC, participants delved into the challenges and sustainability of digital transformation. The session included Eric K. Ogunleye, Director of African Development Institute at the AfDB, Zaki Khoury, Senior Digital Development Specialist at the WB, Emilio Pineda, Manager of Institutions for Development Sector at the Inter-American Development Bank (IDB), and Jaesik Shin, Deputy Director General for Policy Coordination, Ministry of Economy and Finance. Dr. Kang emphasized that “Developing AI and software specialists can be a pathway to closing the digital divide” and called for strategic planning in this area.   Knowledge Forum The Knowledge Forum, a highlight of the second day, was conducted in a more casual atmosphere to foster flexible and open dialogue as participants explored pathways for the future in the digital era. [KED Talk] A session was organized to engage in a deeper discussion on developing AI and software specialists, the main topic of the first day’s roundtable. Chaired by Professor Lee Chan of School of Transdisciplinary Innovations & Vocational Education and Workforce Development at the Seoul Nat’l Univ., the panel included Sheila Jagannathan, Independent Senior Consultant of WB Open Learning Campus, along with representatives from Samsung and SK Group departments dedicated to fostering young talent. [Startup Stage] A session was prepared to introduce AI-based startups, highlighting those dedicated to climate-tech and working towards a more sustainable, greener future. . Chaired by Donghyun Park, Economic Advisor at the ADB, the discussion featured panelists such as Zaki Khoury, Senior Digital Development Specialist at the WB, along with representatives from Gridwiz, Korea Green Data, SIA, and Ecopeace. This platform provided an opportunity to gain integrated perspectives from international organizations and startups on the impact of AI on the climate crisis.   Special Exhibition In conjunction with the 2024 KED, an opening ceremony was held for a special exhibition on digital twins, attended by prominent figures from KDI and MOEF, along with various international organizations and private companies that contributed to this exhibition contents. Titled "Digital Twin: A New Horizon for Problem Solving,” the exhibition, open until September 30, 2025, traces the development of digital twins from their origins to their current and future advancements. Through a range of real-world applications, it explores the new horizons that digital twins are pioneering.   Side Events Various activities were organized as side events, including capacity-building workshop on sustainable smart cities, education program, a book curation and a cultural night.    [Capacity-Building Workshop]  “2024 KDI GKEDC Capacity-Building Workshop on Sustainable Smart Cities (Oct.27-Nov.2, 2024)”, provided key partner countries, including ASEAN member states, Hungary, and Saudi Arabia, with tailored sessions focused on smart city policies and technologies. Participants engaged in lectures, site visits, business meetings, and project proposal seminars*, exploring smart mobility, security, and environment. The program effectively addressed each country's policy needs, strengthening practical capabilities and fostering cooperation. They also attended the 2024 KED, where they engaged in discussions with fellow participants on achieving sustainable digital transformation. Participants appreciated the opportunity, noting the strengthened collaboration with South Korea and the potential for future partnerships. *The project proposals submitted by each participating organization were refined with feedback from expert advisors, and the finalized proposals will be submitted through diplomatic channels.   [Education Program] The digital education sessions, aimed at international students, focused on "Digital Literacy: Exploring Economic Development with Data” and "I am a Short-form Creator.” The program provided training on data analysis and video production using digital devices, equipping participants with effective skills for utilizing digital technology.   [KED Night] Finally, KED’s Night featured appearances by Taegee Min, Director of S&H Co.Ltd, Sangheon Lee, CEO & Founder of the MetaLocat, Virtual Artist APOKI, and noted artists (Baek A-yeon, SURL, Kim Neuk), lightening the mood. The concert, which brought together both domestic and international attendees along with community residents, embodied the vision of "From Exchange to Empathy,” drawing down a curtain in the grand finale. Written by: Yuna Kim, Research Associate, Global Knowledge Cooperation Team 1, 02-6312-4084, yuna_kim@kdi.re.kr