South Korea's central bank cuts outlook on trade battle

People pass by sale signs at a shopping district in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. Bank of Korea said Thursday it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth. (AP Photo/Lee Jin-man)
Bank of Korea Gov. Lee Ju-yeol arrives for a press conference in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. Bank of Korea said Thursday it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth.(AP Photo/Lee Jin-man)
A woman films with her smartphone near the display of South Korea's capital Seoul logo, in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. (AP Photo/Lee Jin-man)
Bank of Korea Gov. Lee Ju-yeol speaks during a press conference in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. Bank of Korea said Thursday it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth.(AP Photo/Lee Jin-man)
Bank of Korea Gov. Lee Ju-yeol speaks during a press conference in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. Bank of Korea said Thursday it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth.(AP Photo/Lee Jin-man)
A man carrying boxes walk by the sign of the Bank of Korea in Seoul, South Korea, Thursday, July 12, 2018. South Korea's central bank has cut its forecast on the country's economy, citing mounting uncertainties from the U.S.-China trade battle. Bank of Korea said Thursday it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth.(AP Photo/Lee Jin-man)

SEOUL, South Korea — South Korea's central bank cut its forecast on the country's economy Thursday, citing mounting uncertainties from the U.S.-China trade battle.

The Bank of Korea said it lowered its growth outlook on Asia's fourth-largest economy to 2.9 percent this year, compared with its earlier forecast of 3 percent growth.

The bank said the spiraling trade battles between the world's two largest economies increased potential risks to South Korea.

"Uncertainties in growth path are higher than ever and the major source of the uncertainties is global trade conflicts," Bank of Korea Governor Lee Ju-yeol told a news conference. "At first we thought the trade conflicts among major economies would not grow further, but as they deepen day by day, now it's very difficult to tell where they're headed to."

If the U.S. delivers on threats such as imposing additional tariffs on Chinese imports and imported vehicles, impact on South Korea's exports will not be small, Lee said.

Worse-than-expected job rates and slower capital expenditure also contributed to the central bank's downward growth revision.

South Korea's growth is expected to further slow in 2019. The Bank of Korea said that the economy is likely to grow 2.8 percent next year.

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