The bank also raised gross domestic product growth for 2009 to 0.3 percent from its earlier projection of 0.2 percent.

"The growth of the Korean economy accelerated last year, helped by a sharp upturn in facilities investment, expanded exports and a pickup of growth in private consumption," the Bank of Korea said in a statement.

The contribution of domestic demand to overall growth rose sharply in 2010, "pointing to self-sustaining recovery in the private sector", said Kim Young-Bae, director general of its economic statistics division.

In the fourth quarter last year the economy expanded 0.5 percent from three months earlier, in line with the earlier estimate.

Compared with a year earlier, it grew 4.7 percent in the final quarter -- less than a previous estimate of 4.8 percent.

Last year's growth in Asia's fourth largest economy was the fastest since 7.2 percent in 2002.

The bank expects growth to slow in 2011 but it stuck by its December forecast of 4.5 percent.

"The economy which grew quickly last year because of a low base of comparison in the previous year will slow this year," Kim told a press conference.

"But the outlook we gave last December largely remains unchanged. Growth won't get any worse than we thought."

Dow Jones Newswires contributed to this report.