Domestic Revival Strengthens

South Korea's economy accelerated in the second quarter of this year, on the back of a revival in private consumption, growing by 3.3% y-o-y after 2.7% growth in the first quarter. Despite the upturn, export growth is still flagging and with the recovery in domestic demand too weak to offset the external slowdown, we expect growth to slow to 3.8% this year, after a 4.6% expansion in 2004. Our forecast matches the central bank's expectations for this year, although South Korea's finance ministry has maintained its 4% growth target. However, despite this optimism, officials have cited sharp rises in international

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