The South Korean economy is expected to return to positive growth in the second half of this year, the central Bank of Korea said Friday.
The BOK said the economy will expand 0.2 percent year-on-year in the second half, a major improvement from a 3.4 percent fall in the first half.
For the whole of this year, the central bank expected a 1.6 percent contraction, revising its earlier forecast of minus 2.4 percent.
The Bank of Korea also raised its growth projection for next year to 3.6 percent from a 3.5 percent forecast in April.
The revisions came amid signs that South Korea, Asia's fourth largest economy, has reached a bottom, emerging from a protracted downturn in the aftermath of the global financial crisis.
The central bank, however, warned of downside risks from rising oil prices and the waning effects of the fiscal stimulus.
South Korean exports are now expected to fall 2.8 percent in 2009, less than a previous prediction of a 9.9 percent slump.
Private spending would likely fall 1.4 percent this year compared with an earlier estimate of a 2.6 percent decline.
Facility investment is expected to tumble 15.1 percent this year while construction investment will probably gain 2.2 percent.