South Korea's central bank on Thursday revised down its 2014 growth outlook to 3.8 percent from an earlier forecast of 4 percent, reflecting dimmer outlook for the global economy.
"The world economy will continue modest recovery, particularly in advanced economies, but the pace of recovery is expected to slow down compared with our July forecast," Bank of Korea (BOK) said in a statement.
The 2014 growth outlook for South Korea was revised down by the BOK to 3.8 percent from an earlier estimate of 4 percent. The outlook for 2013 was unchanged at 2.8 percent estimated three months earlier.
The downward revision came two days after the International Monetary Fund (IMF) cut its growth forecast for the world economy to 3.6 percent. The figure for 2013 was set at 2.9 percent, 0.3 percentage point lower than its July projection.
The IMF also revised down its growth outlook for South Korea to 3.7 percent in 2014 and 2.8 percent in 2013 each, citing downside risks to the global economy, according to the IMF's World Economic Outlook report.
Seoul's Finance Ministry set its 2014 growth outlook at a higher level of 3.9 percent than the IMF's forecast, but the country's parliamentary budget office projected the economy to increase 3.5 percent next year.
"IMF's forecast for the global economy, 0.2 percentage points lower (than the July projection), was reflected in our downgraded outlook," BOK Governor Kim Choong-soo told reporters.
In terms of future growth path, downside risks would predominate, the central bank said, citing the tapering of U.S. monthly bond purchases and uncertainties over the U.S. budget plan and debt ceiling negotiations.
South Korean lawmakers urged the government on Tuesday to prepare for the prolonged U.S. fiscal crisis, saying that the " fiscal cliff crisis" would last even after agreements on the budget plan and debt ceiling are reached.
If Congress fails to raise the current debt limit of 16.7 trillion U.S. dollars by the deadline of Oct. 17, the U.S. administration will fall into default on debt for the first time in the country's history.
Outlook for the country's 2014 consumer price inflation was lowered by the BOK to 2.5 percent from an earlier estimate of 2.9 percent. The figure for 2013 was cut to 1.2 percent from 1.7 percent.
The central bank said that downward inflationary pressures, including slowing global economic recovery and a fall in international commodity prices, would outweigh upward pressures such as a surge in farm goods prices caused by bad weather.
Private consumption, another growth engine for the economy, was forecast to 3.3 percent in 2014, down from an earlier estimate of 3.5 percent. The figure for 2014 facility investment was cut to 5. 7 percent from 7 percent.
Exports of goods, on which the South Korean economy heavily depends, were expected to expand 7.2 percent in 2014, downgraded from a previous forecast of 8 percent.
Meanwhile, outlook for the country's 2013 current account surplus was upgraded to 63 billion U.S. dollars from a prior projection of 53 billion dollars. The figure for the 2013 export growth was revised up from 5.1 percent to 5.5 percent.
The daily average exports reached an all-time high of 2.24 billion dollars in September, brightening outlook for the country' s GDP growth in the fourth quarter.