|Following the decline in private consumption in spring 2014, the economy is gradually rebounding, thanks in part to monetary policy easing, fiscal stimulus and measures to boost the housing market. Output is projected to grow at around 4% in 2015-16, helping to narrow Korea's large current account surplus and to lift inflation to the target range of 2.5% to 3.5%.
While fiscal stimulus to support growth is appropriate, given Korea’s strong fiscal position, the top priority should be wide-ranging reforms, particularly those in the 2014 Three-Year Plan for Economic Innovation, to sustain the country’s growth potential. Policies to revitalise the housing market should be implemented carefully to avoid aggravating the household debt problem.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.