The South Korean cabinet on Monday approved a 10-percent cut in oil tax and other measures such as the expansion of tax favors to companies and lower private education expenses to revitalize the country's economy.

The move is considered President Lee Myung-bak and his administration's first major efforts to fulfill his presidential campaign promises.

Lee, the first South Korean president to come from a business background, won a landslide victory in last December's election. He pledged to make economy his top priority during the campaign.

Lee promised to achieve 7-percent annual economic growth, double the country's per capita income to 40,000 US dollars over a decade and lift the country to one of the top seven economies in the world. He called this his "747" economic development blueprint.

The blueprint was well mapped out, but a bumpy road still lies ahead for the new president to tackle unfavorable circumstances in efforts to follow through on his pledge and boost economic growth, analysts said.

By official figures, the East Asian country's economy grew 4.9 percent last year, down slightly from the 5 percent the year before.

However, according to Korea National Statistical Office, annual inflation rose to 3.6 percent in February after 3.93 percent in January, the highest rate for 39 months.

Economists predict that economic growth will almost certainly fall short of the 6-percent projection Lee's administration has targeted for this year.

The Bank of Korea (BOK), South Korea's central bank, was also not optimistic about this year's economic growth.

On February 4, the bank downgrade its economic growth projection for this year to 4.7 percent from its previous forecast of 5 percent last December, citing the fallout of the US subprime mortgage problems and rapidly rising oil prices.