South Korea's economy is expected to grow in the mid-3 percent range this year on resilient exports, a leading private think tank said Thursday.

Asia's fourth-largest economy is likely to expand 3.5 percent on-year this year, a sharp turnaround from a 1 percent contraction in 2020, according to the Korea Economic Research Institute (KERI).

KERI's latest projection is higher than the 3 percent forecast made by the Bank of Korea in late February.

The think tank under the Federation of Korean Industries, the lobby for South Korea's family-controlled conglomerates, attributed its rosy growth outlook to improving overseas shipments stemming from a recovery in the global economy.

KERI also said the most critical risks to South Korea's growth path will be the country's measures to cope with a new coronavirus wave and the pace of its vaccine rollout.

South Korea's exports are projected to climb 5.1 percent on-year in 2021, compared with a 2.4 percent on-year decline in 2020.

Corporate capital spending is predicted to swell 5 percent this year on aggressive investments in chip, IT and environment-friendly sectors.

Construction investment is forecast to increase 1.7 percent on-year, compared with a 0.1 percent on-year decline in 2020.

Private consumption, which accounts for the bulk of domestic demand, is predicted to grow only 2.2 percent, a drastic turnaround from a 5 percent fall in 2020, due to a resurgence of COVID-19 and rising household debt.

South Korea's consumer prices will likely increase 1.1 percent on-year in 2021, a tad higher than the previous year's 1 percent gain, according to the think tank. (Yonhap)