The South Korean economy grew at the fastest clip in more than two years in the third quarter on recovering domestic demand and an increase in facility investment, the central bank said Thursday.

Korea's gross domestic product (GDP), the broadest measure of economic performance, advanced 1.1 percent in the July-September period from three months earlier, unchanged from an earlier estimate, according to the Bank of Korea (BOK).

The economy also grew at an identical pace of 1.1 percent on-quarter in the second quarter.

The two consecutive quarterly growth rates mark the fastest expansion since a 1.3 percent on-quarter advance in the first quarter of 2011.

Compared with a year earlier, the country's economy grew 3.3 percent last quarter, quickening from a 2.3 percent on-year expansion three months earlier, the central bank said.

The data came as the government has been showing confidence over a moderate economic recovery, although downside risks remain, stemming from the uncertainties with the U.S. stimulus tapering.

The BOK earlier projected that the local economy will likely grow 2.8 percent this year, with quarterly growth staying around 1 percent every quarter into next year.

Exports, which account for about 50 percent of the economy, declined 1.3 percent in the third quarter from three months earlier, further down from the previous projection of a 0.9 percent drop.

Private spending grew 1.0 percent on-quarter last quarter, holding almost steady from an earlier estimate of 1.1 percent.

Government spending increased 0.1 percent on-quarter in the third quarter, sharply slowing from a 2.4 percent gain in the previous quarter.

Facility investment rose 1.0 percent last quarter. Construction investment advanced 3.2 percent, quickening from a 2.7 percent forecast, the BOK said.

The gross national income (GNI), a gauge of the populations' purchasing power, rose 0.2 percent on-quarter in the third quarter, growing at the slowest pace in six quarters since the 0.1 percent fall in the first quarter of 2012.

The BOK said that a hike in oil prices and a decline in outbound shipments weighed down Korea's trade terms over the cited period (Yonhap News)