Bank of Korea (BOK), South Korea's central bank, on Friday cut its 2012 economic growth outlook for the country to 3 percent from an earlier estimate of 3.5 percent, citing global economic slowdown and external uncertainties caused by Europe's debt crisis.
The Asia's No.4 economy was forecast to grow 3. 8 percent in 2013, down from a prior estimate of a 4.2 percent expansion, according to the BOK.
Market watchers expected the BOK to sharply lower its growth outlook as the unexpected rate cut reflected the worsening of the bank's views over the country's future growth path.
"We were not too surprised at the rate cut coming a bit earlier than expected. The move supports the view that the BOK will cut its 2012 GDP growth forecast from 3.5 percent to about 3.0 percent, " Kwon Young-sun, an economist at Nomura in Hong Kong, said in a report.
The BOK attributed the outlook downgrade to external uncertainties. The bank said jitters in the global financial market will last due to uncertainties stemming from the euro area' s fiscal crisis, noting that growth in both advanced and emerging economies will slow down.
"Uncertainties in the euro area are the biggest risk factor to restrict our economy's growth. We do not expect the uncertainties to deepen further in the second half, but external conditions will not be improved to a great extent," Shin Woon, director general of the BOK said.