South Korea’s economy is expected to grow 3.7 percent this year, a state-run think tank forecast Tuesday, amid expectations that the economy might be recovering from a long-term slump.

Reflecting recent changes in calculation methodology for gross domestic product, however, the Korea Development Institute said its latest growth outlook represented about a 0.1-0.2 percentage point downgrade from the previous growth outlook unveiled in November last year.

“The actual downgrade stemmed mostly from a fall in private-sector consumption,” Cho Dong-chul, a senior economist at the think tank, told reporters during a press briefing.

“We are still monitoring the aftermath of the deadly ferry accident last month and its impact on domestic demand, but things will surely slow down to some extent, which was also reflected in the latest outlook,” he added.

The KDI’s latest growth estimate is lower than 3.9 percent and 4 percent earlier predicted by the government and the central bank, respectively. The KDI said that the economy will grow 3.8 percent in 2015.

Private consumption is expected to grow 2.7 percent this year, sharply downgraded from 3.6 percent that it projected in November.

Consumption will likely grow 3.2 percent next year. Facility investment will grow 8 percent this year, which is also lowered from its previously predicted 8.4 percent. For next year, the growth rate will slow to 6.8 percent growth. (Yonhap)