As the government submitted the Nation’s Fiscal Management Plan 2007-2011 to the National Assembly based on the National Fiscal Act enacted in 2006, in-depth analyses on the soundness of nation’s finance, tax revenue and government’s expenditure, and the effective budget allocation over the middle-term are required. In order to support the analyses National Assembly Budget Office published NABO Middle-Term Economic Outlook 2007-2011 and plans to publish the report annually.

The annualized average rate of Korea’s economic growth from 2007-2011 is expected to be 4.7% which is 0.1% point lower than it was from 2002 to 2006. More specifically, Korean economy will rise to the annualized rate of 4.6% in 2007 and expected to record 4.8% in year 2008 and 2009. It will be slowed down to 4.7% and 4.6% in 2010 and 2011 respectively.

The reason why Korea’s economic growth rate is expected to be lower in 2010 and 2011 is that the domestic demand’s contribution rate to Korean economic growth is to rise slowly while net-expert’s contribution to Korean economic growth will be weaker because of the worsening of foreign economic conditions. Domestic demand, which has been low due to the excessive debt of household and the delay of creating job opportunities for the past 5 years, is expected to recover due to the strengthening of competitive power in the financial industry and the service industry. As the domestic demand’s contribution to Korean economic growth increases, export dominated imbalance will gradually be balanced. The contribution rate of the private consumption to economic growth will increase from 19.2% during 2002-2006 to 43.9% during 2007-2011 and that of facilities investment from 10.4% to 18.1% while net export’s contribution rate will decrease from 50.6% to 12.2% in the same period.