BIS Review 108/2010  3  Strengthening the economic fabric Strengthening the economic fabric constitutes the second policy challenge. It is absolutely vital to strengthen the basis for domestic demand so that the Korean economy can attain a well-balanced growth path without being excessively affected by changes in the external environment.
Toward this end, the role of households as consumers and that of small and medium-sized enterprises (SMEs) as the main source of job-creation are very important for balanced economic growth. But the current situation of both households and SMEs is only fragile. For households there is not enough capacity for spending because of the weight of their accumulated debts and lower saving rates.