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The South Korean economy is on a moderate recovery track, but it faces greater downside risks as external economic uncertainty has heightened amid the Ukraine crisis, a state-run think tank said on Thursday.

Asia's fourth-largest economy has extended its recovery momentum, led by robust growth in the manufacturing sector, but business sentiment has worsened as Russia's invasion of Ukraine has jacked up raw material prices, Yonhap news agency reported citing the Korea Development Institute's (KDI) monthly economic assessment report.

"Trade balance deteriorated due to soaring raw material prices and consumer prices jumped, which could put a drag on the recovery of the South Korean economy moving forward," the report said.

South Korea's consumer prices grew more than 4 per cent for the first time in more than 10 years in March as energy prices shot up amid Russia's war with Ukraine.

Consumer inflation rose 4.1 per cent on-year in March, accelerating from a 3.7 per cent gain in February and above the central bank's inflation target of 2 per cent, according to government data.

The Bank of Korea (BOK) said consumer prices are expected to be further under upward pressure coming forward, adding annual inflation growth could exceed its 2022 forecast of 3.1 per cent.

Dubai crude, South Korea's benchmark, came to $103.79 per barrel Wednesday, sharply up from $77.12 at the end of last year. It hit a yearly high of $127.86 per barrel on March 9. South Korea depends mainly on imports for its energy needs.

South Korea's exports gained 18.2 per cent on-year in March to hit an all-time monthly high on brisk demand for chips and petroleum products, according to the trade ministry.

But surging energy costs also pushed up the country's imports to a record high in March. This led the country to post a trade deficit of $140 million.

The BOK and the International Monetary Fund forecast the South Korean economy to grow 3 per cent this year. But global credit appraisers Moody's Investors Service and Fitch Ratings lowered their economic growth forecast for South Korea to 2.7 per cent from 3 per cent.