South Korea’s economy is expected to grow 3.2 percent in 2012 in the face of persistent eurozone woes and uncertainties surrounding the U.S. and Chinese markets, a local think tank said Wednesday.

The prediction made by the Korea Economic Research Institute is lower than the government’s official growth target of 3.7 percent set for this year, and 3.5 percent growth forecast made by the country’s central bank.

The research arm of the Federation of Korean Industries, the leading business lobby, added first-half growth may advance just 2.9 percent on-year, with the figure going up 3.4 percent in the July-December period.

“Worries that Europe’s fiscal crisis situation may not be resolved in a timely manner and slow recovery in the United States and China have affected the country’s ability to pull off solid growth,” it said.

KERI said the country’s exports, which play a critical role in growth, will likely grow at a single-digit rate this year, because of weak overseas demand and gradual appreciation of the Korean won against the U.S. dollar, which can make local products more expensive abroad.

The institute claimed the local currency could rise to 1,099 won to the dollar, which could start to hurt outbound shipments.

Studies have shown if the won appreciates 10 percent, it can push down exports by 3.2 percent and hurt annual national growth by 0.35 percentage point.

It said inflationary pressure, however, will dip in the coming months as international crude prices fall, and expected the country’s current account surplus to reach $10.6 billion in the second half from $5.3 billion in the first half. (Yonhap News)