South Korea cut its economic growth forecast Thursday as Europe's debt crisis dampens demand for the country's exports, according to AP. Gross domestic product will likely expand 3.3 percent this year, down from an earlier projection of 3.7 percent, the finance ministry said in a statement. "The worsening overseas situation including Europe's fiscal crisis is delaying a recovery," the ministry said. "But an improved job market during the second half of this year and slowing consumer price rises will drive a recovery on the back of domestic demand." In the first three months of this year, Asia's fourth-largest economy relied on domestic consumption to drive economic growth as Europe's debt crisis hurt shipments to major markets including China and Europe. The government said growth for the rest of the year will be reliant on domestic demand and exports will recovery only gradually. The Bank of Korea and the International Monetary also recently cut their growth forecasts for South Korea. The central bank is forecasting 3.5 percent growth for 2012 and the IMF expects 3.25 percent growth. The finance ministry also lowered its estimate for consumer price inflation, citing lower crude oil prices. It estimated a 2.8 percent rise in South Korea's consumer price index this year. It previously predicted a 3.2 percent rise. Despite slower growth, the government said the nation will add 400,000 new jobs during the second half of this year, about 40 percent more than its earlier estimate as the services sector creates employment.
