The International Monetary Fund Monday lowered its prediction for South Korea's economic growth for next year to 2 percent from its earlier forecast of 3.5 percent, citing the ongoing global financial crisis adversely affecting domestic spending and exports, according to Yonhap News.
The lending agency had projected South Korea's growth rate for next year at 3.5 percent in October and 4.3 percent in July.
The figure is just half of the South Korean government's projection of 4 percent for next year, and much lower than projections made by major South Korean think tanks.
The Korea Development Institute recently put the figure at 3.3 percent, while the Samsung Economic Research Institute came up with 3.6 percent.
In its Regional Economic Outlook (REO) for Asia and Pacific, the IMF maintained this year's growth forecast for South Korea at 4.1 percent.
The growth forecast for China next year was also cut by 0.8 percentage point to 8.5 percent and that for India was down 0.6 percentage point to 6.3 percent.
Japan was forecast to record a minus 0.2 percent growth next year, down 0.7 percentage point from an earlier projection.
Hong Kong and Singapore's economies will likely grow 2.0 percent next year, down 1.5 and 1.4 percentage points, respectively.
"Growth in Asia is expected to slow substantially along with the rest of the world, as exports weaken and spillovers from the global financial turmoil weigh on domestic activity," the report said.
Jerald Schiff, senior adviser for Asia and Pacific Department of the IMF, singled out South Korea as an example for a country that can employ more fiscal spending to prop up its struggling economy.
"I think that there are a number of countries in Asia where fiscal stimulus is feasible and probably desirable," he told a news conference convened to announce the REO report. "Several countries have already announced fiscal stimulus packages, for example, Korea. And many countries in the region have pretty low deficits and debt."