Despite sluggish recovery in consumption and investment, Korean economy has bounced back somewhat last year, largely thanks to strong export. However, the economic prospects this year look rather unpromising since sharp appreciation of Won is expected to take its toll on the export growth. Increasing global competition both from rapid developing economies such as China and India and from recovering Japanese economy may further erode the competitive edge of Korean economy.
There are also the structural challenges which Korean economy has to deal with in the near future. The unprecedented low fertility rate and rapid population ageing are likely to diminish growth potential and undermine long term fiscal sustainability.
This report covers seven issues of current interest, addressing both the short-term and the long-term policy questions. The first two issues, the effects of Won appreciation to export industry and the relations between house price and housing finance market, deal with immediate policy questions. Next, it examines the contents as well as the expected consequences of the non-regular worker bill and the Capital Market Consolidation Act. Finally, this report analyzes the issue of productivity enhancement in service industry, financial support policy for small and medium enterprises, and the reform plan for state pension scheme, which will help evaluate government's plan for long-term structural reform.