A state-run research institute revised up its growth forecast for the South Korean economy this year based on expectations that exports will significantly improve.

In a report on Thursday, the Korea Development Institute(KDI) projected that the economy will expand three-point-eight percent this year, up point-seven percentage points from its November forecast. The think tank predicted the economy to grow three percent in 2022.

KDI said even with the upward revision, the economy will still come short of the previous target with an average growth of one-point-nine percent between 2020 and 2022.

The think tank forecast the nation's exports to rise by eight-point-six percent this year, on the back of  a surge in demand for semiconductors, automobiles and petroleum goods, in line with its outlook for a faster than expected global economic recovery

Recovery in domestic demand, however, will be slower, with private consumption growth expected to rise by two-point-five percent this year due to constraints on face-to-face services.

Amid a gradual recovery, the KDI forecast that growth in different sectors will be uneven due to the varying economic shock and speed of recovery.