The South Korean economy continued to grow at the fastest pace in more than two years in the third quarter on improving domestic demand and a pickup in facility investment, the central bank said Friday.

Korea's gross domestic product (GDP), the broadest measure of economic performance, grew 1.1 percent in the July-September period from three months earlier, after expanding at an identical pace of 1.1 percent in the second quarter, according to the Bank of Korea (BOK).

It marked the fastest quarterly growth since a 1.3 percent on-quarter advance in the first quarter of 2011.

From a year earlier, the economy grew 3.3 percent in the third quarter, the fastest on-year growth in seven quarters, after gaining 2.3 percent on-year in the second quarter.

The growth data, which topped market expectations, is underscoring the view that the Korean economy is on the recovery track.

The central bank said that domestic demand led the economic growth in the third quarter as exports declined from three months ago, mainly due to seasonal factors.

"Last quarter, consumer spending performed better than expected as food prices stabilized," Jung Young-taek, the director general of the BOK's economic statistics division, told reporters.

Jung declined to say whether the local currency's recent rising trend affected the performance of Seoul's exports but added that overseas shipments remained brisk in October.

"If the Korean economy is to gain traction, facility investment should further expand. Consumer spending also should serve as a buttress to the economy," he added.

Exports, which account for around 50 percent of the GDP, declined 0.9 percent on-quarter in the third quarter after growing 1.8 percent on-quarter in the previous quarter. Private spending rose 1.1 percent on-quarter after gaining 0.7 percent in the second quarter.

The data came as Finance Minister Hyun Oh-seok said Thursday that the local economy is showing signs of escaping from the low growth trend, expressing optimism over the growth momentum.

The BOK earlier said that the quarterly growth is likely to reach around 1 percent every quarter into next year. The bank's 2013 growth estimate stood at 2.8 percent.

But the BOK recently revised down its 2014 forecast for Asia's fourth-largest economy to 3.8 percent from 4 percent, saying that downside risks overwhelm upside risks to growth, such as uncertainties over the Federal Reserve's monetary stimulus tapering and the instability of oil prices.

The central bank froze the key interest rate at 2.5 percent for the fifth straight month in October after making the first rate cut in seven months in May.

Facility investment rose 1.2 percent last quarter, compared with a 0.2 percent on-quarter decline in the previous quarter.

Construction investment advanced 2.7 percent, compared with a 3.4 percent on-quarter expansion three months earlier, the BOK said.

But the growth of government spending sharply slowed to 0.1 percent in the third quarter from a 2.4 percent gain in the previous quarter. (Yonhap News)