SEOUL (Reuters) - The recovery in private sector economic activity will continue to gather pace in the second half of the year despite the waning effects of fiscal stimulus, a senior finance ministry official said on Monday.
Yoon Jong-won, the ministry's head of economic policy bureau, also said during a radio programme Asia's fourth-largest economy would probably grow faster than the ministry's 5 percent target this year, but did not provide a new figure.
"It all depends on how much the domestic and external situations will impact," he said. "Nevertheless, I think the private sector's recovery will gradually strengthen."
Both South Korea's government and the central have said that private sector upturn was essential for recovery to become self-sustained and allow the authorities to start unwinding stimulus deployed during the global financial crisis.
Yoon also told private YTN radio channel that concerns about the euro zone's debt crisis and a possible rise in commodity prices posed the main risks to economic growth for the rest of the year.
Yoon said the ministry was working on revised economic forecasts for announcement later this month, but refused to say if the 5 percent growth target would definitely be raised.
South Korea's central bank and international institutions such as the Organization for Economic Cooperation and Development have recently upgraded their 2010 growth forecasts to more than 5 percent.
Yoon declined to comment on interest rate policy by repeating the official stance that it was the central bank's prerogative. The Bank of Korea holds its regular review on Thursday. Its governor started priming markets for a start of a rate tightening cycle sometime in the next quarter, but bond investors have pared their bets on rate rises after Europe's debt problems revived doubts about the strength of the global economic recovery.
(Reporting by Yoo Choonsik; Editing by Tomasz Janowski)
