The South Korean economy underwent an extreme slump in exports and weaker-than-expected recovery in private consumption last year. A series of government-led stimulus policies had to face a number of unfavorable external factors.

From the beginning of 2016, uncertainties have started clouding the local market. Among those are the economic slowdown of China — largest export destination of Korea — a deep slide in international crude prices and the Korean currency’s volatility against major currencies.

Leading conglomerates including Samsung and Hyundai Motor has faced keen competition on the global stage. The government and corporate sector should be alert to the situation that Korea is being rigorously challenged by China in the IT and automobile segments as well as the sluggish shipbuilding and steelmaking industries.

President Park Geun-hye appears to be pinning big hopes on new Deputy Prime Minister and Finance Minister Yoo Il-ho.

During their recent briefing to Park on the policy direction for this year, economic policymakers pledged to reinforce both exports and domestic demand.

The seven economy-related ministries led by the Ministry of Finance emphasized a balanced recovery both in exports and private consumption.

They vowed to put priority on expansionary fiscal policy this year to boost domestic demand as a whole, supplementing weak private consumption.

The 2016 policy is aimed at keeping alive the pace of recovery that started in the third quarter when growth hit a five-year high of 1.3 percent on-quarter, while the country posted an on-year drop in exports every single month last year.

The government will frontload its scheduled 2016 spending in the first quarter of this year to fuel the flagging economy, with additional investments by public agencies and pension funds.

The Finance Ministry earlier said that it would spend 30 percent of its 330 trillion-won ($270 billion) budget in the first three months of the year to prevent a possible drop in consumption as the temporary excise tax exemption program for cars and large consumer appliances lapsed at the end of last year.

At the same time, the government will host nationwide discount events, including the Korea Grand Sale, to maintain the upbeat trend in consumption.

However, there is a prerequisite. Policymakers should take all possible effective measures to resolve the mounting household debt as soon as possible. A soft-landing of the combined debt would ensure a steady recovery in domestic demand.