"If the current situation continues, the economy is expected to grow by around three per cent next year. If the global economy shrinks further, it may be difficult to achieve three per cent growth," he told reporters.

Kang said he also expected the country's current account to swing to a surplus of about $5bn in 2009 after posting its first annual deficit in 11 years of about $10bn this year.

The ministry also said it would sharply raise the size of bond sales to fund intervention in the foreign exchange market and offer a state guarantee on foreign-currency deposits at local financial institutions.

South Korean Share prices fluctuated in volatile trading on Monday, rising by much as four per cent then briefly turning negative ahead of the government announcement, before rising again on the release of the stimulus measures.

Seoul's benchmark Kospi index lost 23 per cent in October.