HONG KONG (Yonhap) -- Standard & Poor's (S&P) said Tuesday it has lowered its forecast on South Korea's economic growth this year due to ongoing global economic uncertainties.
South Korea's economy will grow 2.5 percent in 2012, lower than its previous estimate of 3 percent, S&P predicted.
The global rating agency said the country's export-driven economy will be affected by a slowdown in China, ongoing troubles in the Europe and a weaker recovery.
"The China slowdown has a flow-on effect to the export-oriented Asian economies of Japan, Korea and Taiwan, and the trading port cities of Hong Kong and Singapore. The slowdown in China and the economies in the eurozone and U.S. have also resulted in lower commodity prices," said Andrew Palmer, a credit analyst at S&P.
S&P also lowered its forecast for China's economic growth this year to 7.5 percent from 8 percent.
"Our lower forecast for China recognizes that the central government had elected not to inject an economic stimulus of a size and speed necessary for an 8 percent growth rate. It appears that the approach by the Chinese authorities remains influenced by the unpleasant experience of the inflationary effect, particularly on real estate prices, of the stimulus they initiated in late 2008-2009," Palmer said.
The credit appraiser added that any worsening of the economic conditions in the eurozone will naturally increase the contagion risk for the Asia Pacific region, as the region is sensitive to capital flows and trade.
In the April-June period of this year, Korea's economy, Asia's fourth-largest, grew 2.3 percent from a year earlier mainly due to sluggish domestic demand and exports. (Yonhap)