The Bank of Korea on Friday scaled back its 2012 economic-growth forecast for the second time this year, a day after it unexpectedly cut interest rates and signaled that it would act pre-emptively to protect against slowing global growth.

South Korea’s economy will expand 3% this year, the central bank said today in a statement, an estimate lowered from a 3.5% prediction made in April and 3.7% in December.

Consumer prices are expected to rise 2.7%, down from an earlier forecast of a 3.2% price gain.

South Korea’s Finance Ministry expects 2012 GDP to grow by 3.3% as against the 3.7% estimate made in December.

Next year, South Korea's economic growth will likely accelerate to 3.8% while inflation will spike to 2.9%, the Bank of Korea said today. Core prices, excluding oil and agricultural products, will rise by 2.2% this year and 2.7% next year.

The current-account surplus is expected to narrow to US$18bn next year from US$20bn this year, the Bank of Korea said. The unemployment rate will likely fall to 3.2% next year from 3.3% this year.

Bank of Korea Governor Kim Choong Soo said yesterday that the central bank's board cut its benchmark rate by a quarter percentage point in response to deteriorating external conditions.

The won dropped the most since May 16 yesterday, leading Asian currencies lower amid mounting concern about the slowing global economy.