However, the government and some analysts cautioned against potential risks in case problems in the US subprime mortgage market spreads into the bigger economy.

Gross domestic product (GDP) in the three months to June rose 8.6 percent over the previous year, better than the initial government estimate of 8.2 percent, the trade ministry said.

Overall, the economy grew 7.6 percent in the first half, it said.

The ministry said it now expects GDP to expand between 7.0 and 8.0 percent this year instead of between 5.0 and 7.0 percent. The economy grew 7.9 percent in 2006, one of the fastest growth rates in Asia.

"Growth has become more broad-based in the second quarter, with the financial services and construction sectors registering edouble-digit growth, and the manufacturing sector remaining healthy despite a slowdown in electronics," the ministry said in a statement.

The manufacturing sector expanded 8.3 percent during the quarter, below initial government estimates of 10.2 percent, but well above the 4.4 percent recorded in the previous quarter.