The Samsung Economic Research Institute projects that the North Korean nuclear issue will likely escalate next year.

In its outlook for 2007, the private think tank predicted a possible turning point in the nuclear standoff where an extended deadlock would likely lead to a new focus on sanctions.

The think thank also forecast that free trade talks with the U.S. will not likely be concluded by March, and that social conflict and overall discontent may grow before December's presidential election.

Political instability is forecast to continue ahead of the presidential election amid conflicting demands of various social groups.

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