South Korea turns more cautious on 2008 economy

SEOUL (Reuters) - South Korea's economy will probably expand by slightly less than the previously projected 5 percent in 2008 due to increased risks from the slowing global economy and firmer oil prices, Finance Minister Kwon O-kyu said.

Kwon said in his New Year news conference, held late last week for publication on Tuesday, that Asia's fourth-largest economy would probably expand in 2008 by a similar pace as in 2007, but did not mention a specific rate.

"Our economy in 2008 is expected to grow close to 5 percent, similar to 2007, with the (year-on-year) growth rate standing higher in the first half than in the second," Kwon said.

The central bank estimated in early December that the economy expanded by a real 4.8 percent in 2007, above its original target of 4.4 percent set a year earlier but down from a 5.0 percent rise in 2006.

He said export growth would slightly fall in 2008 due to a slowing global economy but construction investment growth would likely pick up, while private consumption and capital investment will grow at a similar pace as in 2007.

Kwon said his ministry did not set a specific target for the gross domestic product growth mainly because a new government will take over in late February, when he and other top government officials are widely expected to be replaced.

Conservative opposition candidate Lee Myung-bak, a former Hyundai Group executive, was elected as the country's president

on December 19 to rule the country of nearly 50 million people for a single five-year term from late February.

He has promised to raise economic growth to 7 percent per year on average during the next 10 years and lift per capita income to $40,000 from the current $20,000.

South Korea's economy derives more than half of its annual output from private consumption but has relied heavily on exports for growth in recent years when consumer spending was growing only slowly.

(Reporting by Yoo Choonsik; editing by Kim Coghill)