South Korea's economy appears to have recorded its fastest quarterly growth for five and a half years in the second quarter, according to estimates released by the Bank of Korea on Friday as it published new gross domestic product forecasts for 2009 and 2010.

Boosted by a series of large government stimulus packages and lower interest rates, Asia's fourth-largest economy grew by an estimated 2.3 per cent in the April-June period over the previous quarter, following a 0.1 per cent rise in the first quarter. It would mark the fastest quarterly growth since the fourth quarter of 2003.

The growth rate represented a 2.5 per cent year-on-year decline but was stronger than expected, prompting the BoK to raise its growth forecasts for the full year to a 1.6 per cent contraction from its April forecast of a 2.4 per cent contraction. It also forecast that the economy would grow 3.6 per cent next year.