This report reviews the current economic situation and the Fifth Five-Year Plan, 1982-1986. The Plan presents a new philosophy for economic management in an effort to adjust to the new situation, which developed as the result of the sharp increase in oil prices, a disastrous harvest and political transition. Greater reliance is to be placed on market mechanisms and the Plan is indicative and will be rolled over and adjusted to the changing economic conditions. While the basic strategy in the Plan is sound, the transition is going to be difficult. In the 1980's Korea will have to adjust to substantially lower growth rates than in the past two decades and find ways of increasing the employment intensity of its growth. The lower growth rates will increase the likelihood of shortfalls in domestic savings compared to the targets and such shortfalls in domestic resources should be matched by cuts in investment rather than increased borrowing beyond the Plan targets. There are several areas, particularly power, transport, and housing, where investment programs can be reduced without damaging the growth prospects.