South Korea on Thursday cut its economic growth forecast by 0.4 percentage point to 2.6 percent for next year, as a slight recovery in exports will be offset by a slowdown in domestic demand. 
The state-run Korea Development Institute predicted that Asia's fourth-largest economy will grow 2.4% in 2017, sharply down from its earlier forecast of 2.7%, while the Korea Economic Research Institute downgraded its estimate by 0.1 percentage point to 2.1% and Japanese investment bank Nomura said South Korea will likely grow 2% next year. 
The Organization for Economic Cooperation and Development also cut its 2017 growth forecast for the South Korean economy to 2.6 percent from 3 percent. 
The Bank of Korea, who holds an outlook of 2.8%, will take similar action in January, South Korean Yonhap news agency said. 
The government said the 2.6% forecast is its target growth for next year amid rising uncertainties in the world economy stemming from the scheduled government change in the United States and a further rate hike by the US central bank. 
The government predicted that private consumption will likely expand 2% next year, slowing down from 2.4% for 2016, on contracted real income and mounting household debt, which already surpassed 1,300 trillion won. 
Along with construction investment, consumption was one of the main contributors to the 2.6 percent growth for the entire economy in 2016, when exports fell 6.1 percent and facility investment retreated 3.3%. 
Exports will make a turnaround to gain 2.9% next year on the back of a recovery in world trade and rising demand for chips and displays, while imports will jump 7.2% on a gain in oil prices. 
Consumer prices will likely go up 1.6 percent next year as a rise in oil prices will fuel inflation at a faster pace than 2016's 1 percent.