the new Fiscal Management Plan raised spending growth to 5.1% annually over 2017-20, up from 2.6% in the previous Plan, financed in part by a hike in the corporate income tax rate. [...]government investment in social overhead capital is to be cut by 20% in 2018, suggesting a need for more spending aimed at increasing productivity, given that labour productivity in Korea is 51% below the top half of OECD countries. [...]structural reforms in product and labour markets are needed to boost productivity growth, which increased at a 0.8% annual pace over 2011-15, below the OECD average. Another downside risk is sluggish business investment following hikes in corporate taxes, higher wages that weaken the profitability of smaller firms and the uncertainty created by the government's pledge to reform the large conglomerates that play a key economic role.