Global investment bank Morgan Stanley has slashed its forecast for South Korea's economic growth citing the country's sluggish exports stemming from slowing Chinese demand, industry sources said Wednesday.

It expected Asia's fourth-largest economy to expand 2.3 percent this year, slower than the previously projected 2.5 percent gain, according to sources who are familiar with the matter.

An economic slowdown in China, South Korea's biggest trade partner, will work to drag down South Korea's overall outbound shipments, the global investment bank has said.

The world's second-largest economy is expected to expand around 6 percent this year, decelerating from last year's 7-percent expansion.

Morgan Stanley also predicted that the Bank of Korea would make an additional rate cut in the upcoming fourth quarter to prop up the economy.

The central bank has lowered its policy rate by a total of 1 percentage point to a record low of 1.5 percent through four rounds of rate cuts -- in August and October last year and March and June this year. (Yonhap)