SEOUL - PRESIDENT Lee Myung Bak said on Saturday South Korea's economy could shrink in the first half of next year for the first time since the 1997 Asian financial crisis.

'For the whole of 2009, we might achieve positive economic growth, but we might suffer an economic contraction in the first and second quarters,' Mr Lee was quoted as saying by Yonhap news agency.

Few countries would register positive economic growth rates in the fourth quarter of 2008 and the first quarter of 2009, he said before receiving government policy briefings at the presidential Blue House.

'The South Korean economy is also expected to hit bottom in the first half,' he said.

Mr Lee's remarks come after the government on Dec 16 cut its 2009 economic growth forecast by one percentage point to three per cent, citing the deepening global economic crisis.

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

Even the revised growth target is one percentage point higher than the central Bank of Korea's prediction of two per cent made earlier this month. -- AFP