Bolstered by greater overseas demand and a recovery in unit export prices, the country's real exports are projected to expand 3 percent on-year in 2017, compared with a 2.1 percent gain last year.

Corporate investment in new plants and equipment are predicted to climb in the 6 percent range on the back of a recovery in the world economy, strong exports of chips and other tech products, and facility expansion to brace for the fourth industrial revolution.

Construction investment is forecast to increase 5.3 percent in 2017 from a year ago, down sharply from a 10.7 percent surge last year.

KERI predicted construction investment to lose steam in the second half when the government tightens its grip on household debt and the property market, which it says is showing signs of overheating in some areas.

Private consumption is expected to grow 1.9 percent on-year in 2017, down from a 2.5 percent increase last year, due to the nation's population aging and greater interest burdens resulting from higher interest rates.

Consumer prices are projected to go up 1.8 percent on-year, with its current account surplus predicted to narrow to $91.3 billion from $98.7 billion last year. The nation's jobless rate is forecast to edge up to 3.8 percent this year from 3.7 percent in 2016.

The think tank said South Korea's exports will likely face such downside risks as a potential US interest rate rise, America's protectionist measures and anti-globalization trends in some European countries. (Yonhap)