South Korea cuts growth views as trade falls on U.S.-China trade war

South Korea on Wednesday cut this year's economic growth target to what would be a seven-year low as the prolonged U.S.-China tariff war hit global demand for the export powerhouse's manufactured goods.

The worsening global outlook has prompted the government to slash its projections for exports for Asia's fourth-largest economy.

"The government will do its best to strengthen the readiness for our economy to make a strong recovery when the global economy reaches the point of up-turn," Finance Minister Hong Nam-ki told a news conference, emphasizing that the current slowing was mainly due to weaker global growth.

The government now aims to achieve growth of between 2.4% and 2.5% this year, slower than the 2.6% to 2.7% range projected in its previous forecast in December, the finance ministry said in a scheduled mid-year update of its economic forecasts.

Bond prices rose, and the won fell in early trade as investors saw the downgrade of economic views supporting the case for a central bank interest rate cut as early as this month.

The three-year treasury bond futures rose 0.13 points after the first hour's trade while the won was down 0.3% against the dollar.

In a dramatic change of its views, the government now expects exports to shrink 5% for the whole of this year, giving up an earlier projection for 3.1% growth.

The ministry also lowered forecasts on most other significant indicators including private consumption, capital investment, and construction spending.