The Korean economy is expected to grow at a slower pace this year than initially estimated due to Britain's vote to leave the European Union and other unfavorable external factors, a leading private think tank said Wednesday.

In its latest economic report, the Korea Economic Research Institute lowered its 2016 growth outlook for Asia's fourth-largest economy to 2.3 percent from an earlier 2.6 percent.

The economy is projected to expand 2.7 percent in the first half of this year from a year earlier, but the growth rate will likely slow to 1.9 percent in the latter half.

KERI under the Federation of Korean Industries, the nation's big business lobby, attributed the downgrade to a set of external negatives, including the Brexit shock.

"There is a high possibility that the South Korean economy will expand in the 1 percent range in the second half of the year due to Brexit, combined with existing unstable conditions abroad such as uncertainty over a U.S. rate hike and China's economic slowdown," it said.

The government's fresh stimulus may help offset the economy's slowdown but its effect will likely be limited given the country's opposition-controlled parliament and the ongoing drive to restructure shipbuilding and other key industries, the think tank said.

The finance ministry said Tuesday it will draw up an extra budget of 10 trillion won ($8.6 billion) in the second half to prop up the sputtering economy. The ministry also cut its growth outlook for this year to 2.8 percent from 3.1 percent.

KERI joins other institutions that have downgraded Korea's growth forecast. The International Monetary Fund and the Organization for Economic Cooperation and Development cut South Korea's growth forecast to 2.7 percent each, while the state-run think tank Korea Development Institute lowered its prediction to 2.6 percent and the Bank of Korea slashed its own estimate to 2.8 percent.

According to KERI, Korea's exports are likely to fall 4.6 percent in 2016 from a year earlier and imports to decline 5.4 percent, with its current account surplus dropping to $99.1 billion from $105.9 billion last year.

Korea's consumer prices are projected to grow 1.2 percent this year from 2015, down from an earlier estimate of 1.4 percent.

KERI, meanwhile, stressed the need to take short-term stimulus measures, including a supplementary budget, to stimulate growth to prevent the economy from relapsing into a contraction phase.

"The South Korean economy appeared to have bottomed out in the first quarter of 2013, but it swung to a downturn from the fourth quarter of last year, sparking growing concern over its contraction," said Byun Yang-kyu, a senior KERI economist. "The government should push forward with measures to spur growth in the short term as well as to boost its long-term competitiveness until the world economy shows signs of recovery." (Yonhap)