I. Economic and Major Policy Trends
The Korean economy has recently shown signs of mild recovery from sluggish domestic consumption as retail sales have turned around on the back of the individual consumption tax cut for automobiles and equipment investment has risen amid the continued boom in construction investment. However, given that the downward trajectory of exports continues to get steeper and the average uptime rate of the manufacturing sector remains low, the nation’s overall economic vitality still seems to be weak. 

II. Causes of the Gap Between Real and Perceived Inflation Rate and Complementary Measures
While the consumer price index (CPI) has risen 1.1% annually on average since 2013, perceived inflation is more than twice the figure at 2.7% during the same period. The gap between the two seems to be attributable to the psychological features of the latter, quality changes in goods, and the representativeness of the CPI items. In order to narrow the gap, it is essential to break down the inflation rate by income bracket, investigate the prices of welfare services as well as house rental fees more thoroughly, which show frequent fluctuations, and standardize the measurement of quality changes.

III. Directions for Employment Policies to Cope with the Demographic Cliff
Korea is expected to face a demographic cliff in 2017, when its working age population begins to dwindle. Major economies around the world have adopted proactive job policies to address the fall in potential growth rate stemming from a shrinking labor force. Compared to the EU and Japan, Korea’s employment rate is higher for the elderly and lower for women and youth. Therefore, the nation needs to focus its effort on enhancing the employment rate of women and youth and improving the qualitative structure of the labor force.

Ⅳ. Relationship Between Tax Revenue Conditions and Tax Administration
An empirical study has revealed that, in tandem with tax revenue conditions, tax administration, such as the intensity of tax investigation, the time of tax return, and the level of postponed tax payment, changes significantly. Such a tendency can cause some significant side effects, undermining the function of national finance in stabilizing the economy and/or lowering the predictability and fairness of tax. In order to prevent these adverse effects of discretionary taxation, it is necessary to enhance transparency in tax administration and accuracy in revenue estimation.

V. Fiscal Status of Local Governments and Institutional Tasks in 2016
The consolidated fiscal deficit of local governments in 2016 is forecast to increase to KRW 14.5 trillion, adding a loss of KRW 3.4 trillion YoY. To better their fiscal status, it is necessary to secure the effectiveness of the emergency financial management system, boost the accounting and financial notification system of net budget surplus, and remove inefficiencies in the revised supplementary budget scheme of local governments.

Ⅵ. Evaluation on Fairness of Regional Funding Allocations for Basic Pension
The central and local governments share the financial burden of the basic pension, which was introduced to promote the stability of the livelihood of the elderly and eradicate poverty among seniors. However, the funding shouldered by some regions is not fairly allocated, considering the population rate of the elderly and fiscal self-sufficiency indexes. Therefore, it is required to reasonably adjust the financial responsibility and strengthen cooperation between the central and local governments regarding the matter.