The South Korean economy is on a recovery track, but external economic uncertainty has markedly increased as the Russian invasion of Ukraine has jacked up prices of oil and raw materials, a state-run think tank said Monday.

Asia's fourth-largest economy is maintaining its moderate recovery on the back of solid manufacturing output, with the latest upsurge in COVID-19 cases having limited impacts on in-person services, the Korea Development Institute (KDI) said in a monthly economic assessment report.

"However, mainly driven by geopolitical risks, major global financial markets became unstable, and raw material prices soared, adding more economic uncertainty," the report said.

It said surging energy costs could place downward pressure on the South Korean economy's growth path.

The South Korean economy is on a recovery path on the back of robust exports of chips and autos, as it expanded 4 percent last year, the fastest growth in 11 years.

South Korea's exports rose 20.6 percent in February from a year earlier, extending their gains into the 16th straight month.

But external economic risks have increased as Russia's invasion of Ukraine has raised concerns about energy supply disruptions. Russia is one of the world's largest oil and natural gas producers.

Dubai crude, South Korea's benchmark, soared to $108.84 per barrel Friday, up from $77.12 at the end of last year. South Korea depends mainly on imports for its energy needs.

Brent oil surged Monday to hit $139 per barrel, the highest level since 2008, on reports the United States and its allies are considering banning imports of Russian oil.

South Korea's consumer prices grew more than 3 percent for the fifth straight month in February as energy costs spiked amid the Ukraine tensions.

Consumer inflation rose 3.7 percent on-year last month, compared with a 3.6 percent on-year gain in January.

The Bank of Korea (BOK) revised up its 2022 inflation growth outlook to 3.1 percent from its earlier estimate of 2 percent. The BOK aims to keep annual inflation at 2 percent over the medium term. (Yonhap)