The Bank of Korea emphasized the importance of the government's role in helping the local economy.
According to its report on Monday, if the government increases spending by around 850-million U.S. dollars, the country's gross domestic product would be lifted by more than one-billion dollars over the course of five years.
That's because the private sector often increases consumption once the government injects more funds for companies and households.
The central bank's figures exclude government spending on unemployment allowances, but take into account the effects of spending in other areas, such as the supplementary budget used for localizing materials, parts or machinery.
Another report by the Hyundai Research Institute said the government should come up with measures to boost the economy as many OECD countries are showing signs of economic slowdown, leading to a possible global recession.
In July, the International Monetary Fund lowered its global growth projection for this year to 3.2 percent.
Growth rates for the second quarter in major economies, including the U.S., China and Europe, were all lower than previous figures.
The main reasons behind this are low investment and consumption, and sluggish exports due to the trade spat between Washington and Beijing.
The research institute says one way to combat the global downside risks is to expand stimulus measures, through expansionary fiscal policy, deregulation or more investment in social overhead capital.
Yoon Jung-min, Arirang News.