SEOUL - SOUTH Korea's government on Tuesday cut its 2009 economic growth forecast by one percentage point to three percent, saying the global financial crisis had spread to the real economy.

The revision came as President Lee Myung-Bak said the economy would hit bottom in the first half of next year and urged ministers to address the crisis aggressively.

'I expect next year will be the most difficult year, especially the first half,' Mr Lee told a cabinet meeting discussing economic policy goals for 2009.

'The year 2008 witnessed an unprecedented global economic crisis and the year 2009 will see each country in the world overcome it in its own way,' he was quoted by Yonhap news agency as saying.

Even the revised growth target is one percentage point higher than the central Bank of Korea's prediction of two per cent made last week.

The Ministry of Strategy and Finance said in its Outlook and Policy Outline for 2009 that growth next year will be 'more or less three percent,' compared with this year's expected 3.6 per cent.

Yook Dong-Han, director-general of its policy bureau, said increased fiscal spending, tax cuts and other stimulus measures should help lift growth by as much as one percentage point.

'The government will make its utmost efforts to achieve three percent growth next year,' Yoon Deok-Ryong, a senior ministry adviser, told journalists.

'At present, it's a key policy goal to expand domestic demand as overseas markets for exports are so weak,' said Deputy Minister Noh Dae-Lae.

However, the current account next year is forecast to achieve a surplus of around US$10 billion (S$14.7 billion) compared to this year's estimated shortfall of US$6 billion, the ministry said.

'The global economy is slowing down faster than expected,' the ministry said. 'But if we carry out the planned boosting measures successfully, we'll be back on the right track from 2010.' It said growth that year may reach four per cent.

After weeks of political wrangling, parliament Saturday approved a 284.5 trillion won (S$305 billion) budget for next year.

The budget, which represents a rise of almost 11 per cent on this year's estimated spending, focuses on job creation and help for the underprivileged.

The finance ministry said on Tuesday some 70 per cent would be spent in the first half of next year to stop the economy worsening further. -- AFP