South Korea is likely to see weaker economic growth in 2011 and 2012, amid growing uncertainties in the global economy, a report said Friday.
British bank HSBC cut its forecast of South Korea's gross domestic product (GDP) for 2011 to 3.4 percent from 4.1 percent, and to 4.1 percent from 4.7 percent for 2012, saying the country is exposed to the slowdown in global demand.
It said the export-driven Korean economy could be dragged down by fading demand in the United States and Europe as they struggle with debt problems.
"South Korea has delivered an impressive recovery since being battered by the global financial crisis in 2008," said Frederic Neumann, co-head of Asian Economics Research at HSBC. "In large part, this is due to the extraordinary competitiveness of Korea's export sector, setting the country up to benefit more than others from rebounding world trade.
"However, this dependence on external demand is now likely to prove more of a liability than an asset as growth slumps in much of the world."
HSBC added, however, that demand in China is expected to hold up better than elsewhere in the world, supporting South Korean exporters.
The bank said South Korea overall appears in more robust shape than in 2008, when the global credit freeze hit the country especially hard.
The banking sector is less reliant on wholesale funding and the central Bank of Korea commands adequate foreign exchange reserves to counter volatility in U.S. dollar funding markets, it said.