2007 OECD Economic Surveys: Korea 2007

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This 2007 edition of OECD's periodic Economic Survey of Korea examines key economic challenges now being faced there. After an examination of recent macroeconomic trends, it looks at monetary policy, housing and regional policies, the fiscal situation and public spending in the context of rapid population ageing, and enhancing the globalisation of Korea.

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Facing the key challenges ahead in Korea

Economic growth in Korea remains one of the highest in the OECD area, led by buoyant exports. Sluggish domestic demand in recent years, though, suggests the need to address structural weaknesses in order to continue the convergence to income levels in the high-income countries. This chapter looks at five key challenges: i) implementing appropriate monetary policy in the context of upward pressure on the exchange rate and real estate prices; ii) coping with rising house prices in the capital region while addressing the government’s priority of balanced regional development; iii) maintaining a sound fiscal policy in the face of upward pressure on spending and weaknesses in the tax system; iv) coping with pressure for increased public social spending and addressing the issue of low fertility in the context of rapid population ageing, while limiting the increase in the tax burden; and v) increasing productivity growth by enhancing Korea’s integration in the world economy.

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