Korean industrial sector production in March increased three percent over February, a government report said, the best monthly increase in factory output in two years.

Increased demand for cars and semiconductor devices fuelled the rise, the report said.

Analysts are predicting that South Korea will enjoy strong economic growth this year after 2001's three percent expansion.
Previous predictions of four percent growth have been revised to around 5.9 percent.

South Korea's central bank has hinted recently that it may raise interest rates from their current record low of four percent.

The government report said that factory inventories were shrinking fast, falling 11.4 percent in March after a 9.6 percent drop in February.