Global rating agency Standard & Poor's said Tuesday that it slashed its growth forecast for South Korea's economy this year to 1.8 percent amid the global economic slowdown.
The latest estimate represented a downward revision from its previous 2 percent forecast in July. S&P said that the South Korean economy could grow 2.1 percent in 2020, also down from its previous forecast of 2.6 percent.
The rating agency said eroding confidence in the outlook is intensifying the investment-led slowdown across Asia-Pacific. It also said trade and technology tension is high and rising, now including the South Korea-Japan dispute.
In July, Tokyo imposed tighter regulations on exports to Seoul of three materials -- resist, etching gas and fluorinated polyimide -- that are critical for the production of semiconductors and flexible displays.
"The Japan-Korea dispute could affect the broader region given both countries' key roles in technology supply chains," S&P said Monday in a report.
S&P said it expects the Bank of Korea to cut its key interest rate to 1.25 percent in 2020.
The central bank kept its key interest rate unchanged at 1.5 percent in its August meeting, about a month after it slashed the key rate by a quarter percentage point in its first rate cut in three years.
The South Korean central bank is set to decide on Oct. 16 whether to cut the key interest rate.
The central bank has been under growing pressure to trim the policy rate given increased downside risks and record-low inflation.
South Korea's consumer prices fell 0.4 percent in September from a year earlier, marking the first on-year drop in inflation since Statistics Korea began compiling related data in 1965.
South Korea's Vice Finance Minister Kim Yong-beom plans to leave for London on Wednesday for a roundtable meeting with foreign investors in a move to explain South Korea's economic conditions and address their concerns, according to the finance ministry.
Kim is also set to meet with Moody's managing director of sovereign risk, Yves Lemay, in London before flying to Washington for talks with Deputy Treasury Secretary Justin Muzinich, the International Monetary Fund's Acting Managing Director David Lipton and IMF's Chief Economist Gita Gopinath. (Yonhap)