Korea has achieved one of the strongest recoveries among OECD countries from the 2008 global recession, led by its robust export performance and the largest fiscal stimulus among member countries. The expansion is projected to continue through 2011 as the positive impact from external demand spreads further to the domestic economy. Sustaining high growth over the medium term requires narrowing the large labour productivity gap with more advanced OECD economies through reforms, particularly in services, where productivity is low. The priority is to strengthen competition by eliminating domestic entry barriers, accelerating regulatory reform, upgrading competition policy and reducing barriers to trade and inflows of foreign direct investment. Such measures should be accompanied by reforms to reduce labour market dualism, which has negative consequences for growth and equity. In addition, it is important to increase labour force participation, notably among women and older persons, not least to mitigate the impact of population ageing.