President Park Geun-hye's administration has made meaningful headway in revitalizing the economy in the face of challenges over the past two and a half years, although tough challenges lie ahead, local observers say.

Days before Park's halfway point in her five-year term in office on Aug. 25, economists pointed out that while lofty goals set at the outset have yet to be fully met, the administration has been consistent in its push for reforms, with some gains having already been made in the realm of the public sector.

Such achievements come as unfavorable external and domestic developments are fueling uncertainties with the recent outbreak of Middle East Respiratory Syndrome pouring cold water on consumer spending.

"So far, the Park administration has been successful in achieving some short-term goals to prop up the economy," said Shin Min-young, a researcher at LG Economic Research Institute claimed.

He said that the government's expansionary fiscal policy stance and low interest rates were all appropriate measures.

Official data supports this view with Asia's fourth-largest economy growing 3.3 percent in 2014. This marked the first time since 2011 that the country's growth was on par with the global economy.

In line with the aim of pushing up the nation's employment rate to 70 percent from the low 60 percent range, some 530,000 new jobs were created last year, the highest reached since 2002. This pushed up the employment rate to a record high of 65.3 percent in 2014.

On the property market front, that is often seen as a barometer of growth, home purchases last year surpassed the 1 million mark, the first such feat since 2006, helped in part by state deregulation on lending and low interest rates.

Data showed the government's strong push to forge a "creative economy" based on innovation, helped set up some 80,000 new companies last year, the highest reported after 2000. Numbers also showed some 30,000 venture capital companies were established for the whole of the year.

In the area of trade, the Park administration concluded a comprehensive free trade agreement network with the United States, the European Union and China, which will effectively help companies increase exports and generate more business opportunities.

Besides improvements in economic indicators, the government has implemented structural reforms, encouraging more business investment and breathing new life into the economy.

"The government released some eight investment promotion programs that made it easier for companies to pour money into projects," a finance ministry official said.

"South Korea became the third country in the world to open a direct Chinese yuan exchange market, which can improve the country's trade competitiveness and help foster growth of its financial sector down the line."

President Park has been recognized for kick-starting reforms of the public sector, labor market, financial industry and education.

Lee Jun-hyup, a research fellow at Hyundai Research Institute, said that while results remain mixed, the administration has been very aggressive in pushing for change.

"In particular, Park's pursuit of reforms in key areas is a step in the right direction," the economist said.

Some experts argue that Park's real challenges will be to reform the labor market, bolster the service sector and boost the nation's slumping exports.

Top policymakers have said introducing a nationwide wage peak system is vital at this juncture because it can create more employment opportunities for young people.

The peak wage system advocated by the government calls for people nearing retirement to accept lower wages, with the money saved by this arrangement to be used to hire new employees.

Finance Minister Choi Kyung-hwan has said on numerous occasions that all 316 public-sector corporations and institutions should adopt the wage peak system within the year. He has encouraged private sector companies to follow suit.

Despite such calls, reform measures have run into stiff opposition from unions who have boycotted tripartite talks to resolve outstanding labor issues since April and have accused the government of trying to make it easier for companies to dismiss workers.

Sung Tae-yoon, an economics professor at Yonsei University in Seoul, expressed reservations about the ability to push forward change.

"With economic momentum falling off, it is imperative that the government manages social dissension effectively," the scholar said, hinting it may not be easy to get workers to accept changes that could erode their job security.

In addition, the government is faced with a tough task of boosting exports and vitalizing the service sector while trying to minimize the fallout of MERS that has caused a sharp drop in consumption, experts said.

South Korea's exports contracted 4.9 percent on-year in the first seven months of 2015, a worrisome development for a country that relies heavily on trade for growth.

Both problems need to be handled if South Korea is to pull off sustainable growth.

The finance ministry was compelled to lower its growth forecast for this year from 3.8 percent to 3.1 percent, mainly due to drops in exports and consumption as well as problems triggered by MERS.

To overcome such obstacles, policymakers have said they will focus all their energy on getting bills passed through parliament that can bolster the service sector, tourism and health service fields.

On trade, the recent move by China to devalue its currency has raised financial sector volatility. Market watchers said such developments are particularly worrisome in light of the expected move by the United States to raise its key rates.

Observers stress that notwithstanding some shortcomings, the Park administration has handled an economic crisis situation in a calm manner. They, however, cautioned things have become much more complicated with mounting uncertainties in China.

"There is a need to come up with contingency plans for all occasions and if a crisis situation arises, immediate action must be taken," a local economist said. (Yonhap)