Seoul - South Korea's economy unexpectedly grew slightly by 0.1 per cent in the first three months of 2009 compared with the last quarter of the previous year, thereby narrowly avoiding sliding into a recession.

The gross domestic product (GDP) was up 0.1 per cent, the Bank of Korea said Friday, compared to a 5.1-per-cent decline in the previous month.

A country is technically regarded to be in a recession when the GDP declines two consecutive quarters compared to the previous quarter.

South Korea's economy was buoyed by interest rate cuts, infrastructure spending and a government tax cuts worth 37 billion dollars.

However, the GDP of Asia's fourth-largest economy contracted by 4.3 per cent year-on-year, owing to drops in production and the service sector, the central bank said.

"On the expenditure side, construction investment showed robust growth while private consumption, facilities investment and exports all fell steeply," the Bank of Korea said in a statement.

The Seoul government in March passed a 28.9-trillion-won (21.5 billion-dollar) stimulus package aimed at boosting infrastructure projects and job creation.

South Korea has been heading towards its first recession since the end of the Asian financial crisis in 1998. According to a Finance Ministry forecast the country's economy is set to contract by 2 per cent in 2009. (dpa)