The nation’s economy will grow 4.1 percent this year, down from earlier estimations but nevertheless picking up momentum after years of slow growth, according to a state-run financial think tank.

The previous figure from the Korea Institute of Finance had been set at 4 percent, which the think tank claimed actually was 4.2 percent when using an updated calculation system.

The lowered growth forecast from KIF is still higher than the conservative 4 percent growth projected by the Bank of Korea.

The gross domestic product is expected to fall by 0.08 percent, assuming that consumer spending will decrease by 0.22 percent over the remainder of the second quarter.

“Korea’s economy has clearly stepped out of the years-long downtrend and its exports have recently remained strong,” said the KIF through a report.

But the deadly Sewol ferry sinking, together with the persisting financial insecurity in emerging states, has largely discouraged consumer sentiment, it said.

So, in order to boost such slow yet obvious signals of growth, the central bank should continue to operate a stable policy stance, according to the think tank.

“The BOK’s key rate should be kept frozen in a bid to back the economic uptrend,” it said.

The central bank is widely expected to once again freeze the key interest rate on Friday, which would mark the 12th consecutive month.

Exports will grow 6.8 percent this year and will continue to be strong, boosting the value of the Korean won especially against the weakening U.S. dollar.

The KIF was also optimistic on consumer spending, predicting a 2.9 percent growth this year, 2 percent up from last year. Consumer inflation, however, will rise by 2 percent, slightly down from the BOK’s estimation of 2.1 percent.

“But in the long-term, it is crucial that the government expands investment in infrastructure and secures its financial soundness as the recent upturns in exports and currency are only temporary phenomena and may be overturned any time in the near future,” the think tank also warned.

By Bae Hyun-jung (tellme@heraldcorp.com)