Anchor: Following the lead of the Bank of Korea, the state-run Korea Development Institute has also raised South Korea's growth forecast for this year. The think tank said exports are improving fueled by a gradual recovery in the world economy, but expected domestic demand to remain weak.
Our Kim In-kyung has more.
 
Report: The Korea Development Institute(KDI) says the South Korean economy is likely to grow at a faster pace this year than previously expected propelled by rising exports.
 
In a report released on Tuesday, the state-run think tank raised its growth forecast for this year to two-point-six percent from two-point-four percent as projected at the end of last year.
 
However, the KDI still expects economic growth to fall short of last year's two-point-eight percent as the country remains bogged down by weak private consumption.
 
It expected consumer prices to increase at the upper-end of one percent led by a rise in oil prices, but expected the growth trend to slow down.
 
It said the jobless rate is likely to be higher than last year. A change in the population structure has narrowed the increase in the number of employees.
 
The KDI said that the economy could swiftly weaken if protectionist moves by the U.S. and geopolitical instability expands.
 
It also raised concerns that households and corporations are becoming more vulnerable to external shocks while South Korea's growth potential is quickly eroding.
 
The research institute advised the government to monitor internal and external risk factors and called for policies that focus on structural reform and macroeconomic stability.
Kim In-kyung, KBS World Radio News.