The International Monetary Fund (IMF) on Tuesday trimmed its growth estimate for the South Korean economy next year to 3.7 percent, saying "global growth is in low gear and downside risks persist."

   In the previous outlook half a year ago, the IMF predicted South Korea would expand at a pace of 3.9 percent in 2014. The IMF kept its growth forecast for the nation this year at 2.8 percent.

   Consumer prices are expected to rise 2.6 percent in 2013, with unemployment rates standing at 3.2 percent, it added.

   The IMF said the major Northeast Asian economy bottomed out at 2 percent in 2012.

   The cut in South Korea's growth estimate came as the IMF revised down its world output forecasts to 2.9 percent this year from its July outlook of 3.2 percent and 3.6 percent in 2014 from 3.8 percent. It cited slowing growth in main emerging economies, including China and India.

   It said South Korea will likely stay on a recovery track for the time being.

   "Supported by the recent fiscal and monetary stimulus, the Korean economy is set for a modest recovery," the Washington-headquartered institute said in its new World Economic Outlook, coinciding with the opening of 2013 Fall Meetings of the IMF and the World Bank.

   The IMF said, however, South Korea's growth may be affected by lingering uncertainties in the global economy.

   "China and a growing number of emerging market economies are coming off cyclical peaks," it said. "Their growth rates are projected to remain much above those of the advanced economies but below the elevated levels seen in recent years, for both cyclical and structural reasons."

   The IMF said the U.S. has seen solid private demand for services and products over the past several quarters, which have been stymied by some new downside risks -- the ongoing shutdown of the federal government and the possibility of a default.

   "While the damage to the U.S. economy from a short shutdown is likely limited, a longer shutdown could be quite harmful," it said. "And, even more importantly, a failure to promptly raise the debt ceiling, leading to a U.S. selective default, could seriously damage the global economy."

   In a press briefing later, the IMF's chief economist, Olivier Blanchard, stressed the urgency for U.S. Congress to reach a deal on raising the nation's debt ceiling, currently set at $16.7 trillion.

   "The effects of any failure to repay the debt would be felt right away, leading to potentially major disruptions in financial markets," he said. "It could well be that what is now a (U.S.) recovery would turn into a recession or even worse."

   But he said such a default by the U.S. is unlikely to happen. (Yonhap News)