South Korea's finance ministry is working to sharply cut this year's economic growth outlook due to growing fallout from the coronavirus pandemic, sources familiar with the matter said Sunday.

Late last year, the ministry predicted a 2.4 percent on-year expansion for Asia's fourth-largest economy this year, but given the toll of the coronavirus outbreak on the economy, it may drastically cut this year's growth estimate.

South Korea's economy shrank 1.4 percent on-quarter in the first quarter of the year, marking the sharpest quarterly contraction since the last three months of 2008.

In the current quarter, the economy may further contract due to sluggish exports and production halts at major plants.

The country has promised relief packages worth some 240 trillion won to ease the economic fallout from the virus, with many analysts expecting the Bank of Korea (BOK) to cut its key rate again in the coming months.

In March, the BOK delivered its first emergency rate cut in over a decade, by slashing the policy rate by half a percentage point to send it below the 1 percent mark for the first time in its history.

Economic institutes offered growth estimates of between minus 1.2 percent and 0.7 percent for the year.

The Bank of Korea (BOK) and state-run Korea Development Institute (KDI) are set to revise their own growth outlooks for the economy this month.

BOK Gov. Lee Ju-yeol said earlier the Korean economy may grow at a rate of below 1 percent this year, while KDI earlier forecast a 2.3 percent growth this year. (Yonhap)