The Bank of Korea slashed its growth forecast for the economy to 2.2 percent on July 18, citing sluggish demand at home and abroad amid growing trade protectionism and a delayed recovery in the global IT sector.

The latest outlook marks a significant downward revision from the 2.5 percent forecast three months earlier and 2.6 percent in January.

The central bank estimated the local economy to grow 1.9 percent on-year in the first half and 2.4 percent in the second half.

“The US-China trade tensions have caused investment sentiment to weaken and the production slump to deepen. High uncertainty from global trade protectionism will remain, resulting in continuing weakness in production and trade,” the central bank said in a statement.

The BOK’s growth outlook revision had been widely anticipated as Asia‘s fourth-largest economy unexpectedly contracted 0.4 percent in the first quarter from three months earlier. On an on-year basis, the local economy grew 1.8 percent in the first quarter.

The Finance Ministry also has reduced its growth forecast to 2.4 and 2.5 percent from the 2.6 and 2.7 percent forecast in December.

By Ram Garikipati and newswires (ram@heraldcorp.com)