I. Economic trends
The South Korean economy has recently posted a sluggish recovery in domestic demand with slowed exports worsening and the economic sentiment index falling. The sluggish exports have been aggravated by deteriorating external economic conditions including China's slowdown in economic growth, the downturn of emerging economies, and the continued drop in international oil prices and unit prices of exports. Domestic demand showed a stagnant recovery with a slowdown in consumption growth and a decrease in facility investment despite an increase in construction investment. The consumer price growth rate dropped below 1% after three months as the impact of the cigarette price increase diminishes and international oil prices continue their fall. The South Korean won/US dollar exchange rate increased drastically due to capital withdrawal by foreigners and a weak yuan, and the treasury bond (three-year) rate showed a declining trend due to the sluggish economy and instability in the international finance market.

II. Review of the risk factors in the South Korean economy in 2016
In 2016, the South Korean economy is expected to face external risk factors including the slowdown of China's growth, the decline of oil prices, the downturn of emerging economies, and the mixed monetary policies of major countries, etc., which will all serve as burdens to South Korea's exports. Internally, while recovery led by domestic demand is expected, the high levels of household/corporate debt are expected to restrict private consumption and investment, requiring appropriate management of the subsequent risks. Therefore, for the South Korean economy in 2016, it is necessary to seek economic stability through an appropriate combination of monetary/fiscal policies in the short-term and to build up growth potential by pursuing consistent restructuring policies in the mid-/long-term through the close review/management of internal/external risk factors.

III. Evaluation of national tax revenue in 2015 and implications
National tax revenue in 2015 reached 217.9 trillion won, which was more than the revised supplementary budget (215.7 trillion won) by 2.2. trillion won but lower than the main budget (221.1 trillion won) by 3.2 trillion won. In spite of the delay in economic recovery (economic growth rate of +2.6%), thanks to the favorable asset market, increase of cigarette prices, and reinforced tax collection administration, national tax revenue posted +6.0% growth compared to the previous year. As the improvement of tax revenue in 2015 was mostly attributable to temporary factors including the favorable asset market and system revision, efforts to maintain fiscal soundness should be continued going forward. For reference, the NABO forecast for the 2015 national tax revenue was 217.8 trillion won (Oct. '14) and 217.7 trillion won (Oct. '15), recording a negligible error rate in the range of 0-1%.

IV. Analysis of the pricing system for petroleum products in South Korea and policy implications
The limited price drop of petroleum products in South Korea, in spite of the recent drastic drop in international oil prices, is attributable to the low proportion of the crude oil import price against the sales prices of petroleum products in South Korea and the high proportion of specific tax, which is not directly linked with changes in oil prices. Moreover, the rise in the FX rate has offset the impact of the drop in oil prices, and some portion of the crude oil import price is analyzed as being absorbed into the refining/distribution margin. Furthermore, while there are opinions that the positive impact driven by low oil prices should be expanded through the conversion to an ad valorem tax system of the oil tax system, there are concerns that the improvement in households' real purchasing power and corporate profit improvement do not lead to the expansion of domestic demand and investment amid the weak recovery of the global economy and high level of uncertainty. Therefore, it is necessary to comprehensively consider the impact of the oil tax system not only regarding the economy but also regarding fiscal revenue and energy consumption in discussing the change of the oil tax system going forward.