Minister: S. Korea recovering but risks remain

South Korea's economy is recovering from the depths it hit last year during the global financial crisis, but risks remain and the government remains vigilant, the country's finance minister said Thursday.

"Barring unforeseen external shocks, the Korean economy is likely to keep gathering steam," Minister of Strategy and Finance Yoon Jeung-hyun told reporters from foreign media organizations. He said the economy is likely to perform better than this year's target of a contraction of 1.5 percent.

"Though the work of recovery continues with some satisfaction, this should not lead to complacency, while many people are still out of work and the economy faces uncertainties and risks," he said.

South Korea's economy expanded a revised 2.6 percent in the three months through June compared to the first quarter, the central bank said earlier this month, amid signs government and central bank efforts to stimulate demand are working. It was the fastest growing quarter in 5 1/2 years. Initially, the bank had estimated the economy grew 2.3 percent.

In the first quarter, Asia's fourth-largest economy managed growth of just 0.1 percent, which came after a 5.1 percent contraction in the fourth quarter of 2008.

Compared to the same period a year ago, however, gross domestic product contracted 2.2 percent in the second quarter, highlighting the impact the global economic downturn has had on South Korea.