The Korean economy continues to recover following the COVID-19 shock, propelled by strong export growth, improving business investment and public support. Growth is set to reach 4% in 2021 and to remain robust in 2022 and 2023, averaging close to 3%. While distancing measures have weighed on the service sector over the past summer, rapid vaccination paves the way for an acceleration in private consumption.
The pandemic highlighted vulnerabilities of the dual labour market and a weak social safety net. A welfare reform needs to be coupled with policies aimed at increasing employment and job quality, especially for women and older workers, who are often in non-regular jobs and the most affected by the crisis. A more flexible labour market would allow workers to move more easily from crisis-hit sectors to growing industries.
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2021 Structural Reform Priorities