The Bank of Korea lowered its economic growth forecast from 4 percent to 3.8 percent on Thursday after raising it from the same level in July.
The central bank cited increased global risks due to fiscal uncertainties in the U.S. and economic slowdowns in Southeast Asia and other emerging countries as the main reasons.
"A pullback in quantitative easing by the U.S. and uncertainties posed by the government shutdown there led to forecasts of a worsening rather than improving global economy," said Shin Woon at the BOK.
The bank also kept interest rates unchanged at 2.5 percent for the fifth month running. It maintained its growth forecast for this year at 2.8 percent. The bank's lowered forecast for next year further sapped expectations among investors. It is 0.1 percentage point lower than the government's.
Earlier this week, the IMF slashed its global growth forecast from 3.8 percent to 3.6 percent and China's from 7.7 percent to 7.3 percent. China is Korea's No. 1 export market, meaning exporters here face a rocky road.
Both domestic and foreign economic research institutes have recently cut their projections for Korea in 2014. The IMF on Tuesday lowered its projection from 3.9 percent to 3.7 percent, and Asian Development Bank from 3.7 percent to 3.5 percent a week earlier.
According to the Korea Center for International Finance and Bloomberg, the average GDP growth forecast for Korea next year by 36 economic research organizations at home and abroad is 3.5 percent, even lower than the BOK's.