Real growth in 2006, at 5 percent, did not fully measure up to the more optimistic forecasts of a year ago but did represent a further recovery from the slump encountered a few years earlier. Forecasts for 2007 center on a decline in growth to 4.5 percent, as the year began on a weak note. Policy officials’ short-run concerns are directed at the possibility of further won appreciation and the state of the housing market. Dealing with longer-run challenges—the low birthrate, Korea’s role amid the rising economies of China and India, and the potentially staggering burden of unification of the two Koreas—is a more difficult task.