South Korea's economy is expected to expand 5.3 percent this year on strong exports and a recovery in consumer spending, a state-run economic think tank said Sunday.
The forecast by the Korean Development Institute was higher than its earlier projection of 5.0 percent in growth for this year - still upheld by the central bank - and the 4.0 percent rise posted in 2005.
But the fourth-largest economy in Asia is expected to slow down next year in line with the United States and China, said the research arm of the finance and economy ministry.
The institute said the central Bank of Korea needs to be cautious in raising its key interest rate further amid stable consumer prices.
The bank on Friday kept its call rate target for April unchanged at four percent, citing the need to support economic recovery amid tame inflation.