The Bank of Korea Friday also lowered its growth forecast for next year, to 3.8 percent from its April forecast of 4.2 percent, Yonhap News Agency reported.
Yonhap said the downward revision was widely expected as the central bank a day earlier slashed the key interest rate by a quarter percentage point to 3 percent.
The bank said downside risks to growth are deemed to be predominant mainly because of the continuing Eurozone debt crisis and economic slowdowns in emerging countries.
"The lowered growth projection points to very low growth for Korea. The economic growth is expected to remain below a long-term growth trend for a considerable period of time," Shin Woon, director-general of the bank's research department, told reporters.
"External economic jitters will likely hurt exports, so overseas shipments' contribution to the economy will be lower than that of domestic demand this year," he said.
The bank estimated exports, which account for about 50 percent of the Korean economy, would grow 4.4 percent this year, down from a previous estimate of 4.8 percent.