The Korean economy has been on a robust growth path, with the EPI showing A+/A economic performance in the past few years and is projected to be 98.2%, or an A level, in 2016.

GDP growth is projected to be 3.2% in 2016 and the unemployment rate to stay below 4%. In order to boost economic growth, the government has adopted an expansionary fiscal stance and the budget is projected to turn into a small deficit in 2015-2016, after more than a decade of government surpluses.

As the government fails to engineer a structural shift away from the export-led growth model, the fate of the economy will become more tied to that of China’s slowdown. It is more clear that President Park Geun-hye is unlikely to be able to fulfil many of her campaign goals related to an increase in welfare-related spending and shifting to the economy to a new model, driven by innovation and creativity rather than export-oriented manufacturing. Moreover, curbing the influence of the country’s large family-run conglomerates, known as chaebol, and encouraging more competition in the economy has not been happening. Furthermore, the Sewol ferry disaster in April 2014 and then the outbreak of Middle East respiratory syndrome (MERS) in June 2015 created additional challenges and complicated the government’s agenda.

The 5-Minute Economist projects Korea’s EPI score to stay around 98%, or an A level, until 2020, supported by relatively high GDP growth and budget surpluses.