Global investment banks and rating agencies forecast that South Korea's economy will advance in the mid 3-percent range this year, data showed Monday, lower than estimates by local government and institutions.

Projections from 33 major IBs and credit rating agencies said South Korea's gross domestic product, the broadest measure of economic performance, is expected to grow 3.63 percent this year, according to Bloomberg data. Last year, the Korean economy grew 3 percent.

Barclays and Wells Fargo projected the highest growth at 4.1 percent for 2014, followed by the Royal Bank of Scotland with 4 percent.

ING Group offered an estimate of a 2.8 percent expansion for Asia's fourth-largest economy this year, the lowest among all rating agencies, followed by HSBC with 3.2 percent and Credit Suisse with 3.3 percent.

Their overall growth projection is lower than 3.9 percent and 4 percent predicted by the South Korean government and the Bank of Korea, respectively.

Market watchers said the BOK and the government may be forced to trim their growth outlook, largely due to a fall in domestic demand from a ferry disaster in April.

Last week, the state-run Korea Development Institute (KDI) downgraded its growth outlook for this year to 3.7 percent from its previously forecast 3.9 percent.

The 6,825-ton ferry Sewol sank in waters off South Korea's southwestern island of Jindo on April 16, killing nearly 290 people with 16 passengers still missing. Shocked and saddened by the tragedy, South Koreans have been spending less and not going out as often since the deadly accident.

The incident may dampen private spending in the second quarter, cutting the country's full-year growth by 0.08 percentage point, the Korea Institute of Finance, a think tank, forecast earlier.

The government has said it will spend an additional 7.8 trillion won ($7.7 billion) during the first half as part of efforts to prop up domestic demand. (Yonhap)