Private and state-run think tanks have lowered their 2014 economic growth forecasts, according to reports out Sunday, citing a protracted slump in consumption in the aftermath of a ferry disaster.

The Hyundai Research Institute had earlier expected South Korea's gross domestic product to grow 4 percent in 2014.

The latest HRI report lowered the outlook by 0.4 percentage point to 3.6 percent, saying the slow recovery in private consumption and construction will drag down the domestic demand.

The growth rate of private spending is expected to reach 2.5 percent, far below the GDP growth rate of 4 percent, as consumers have been reluctant to spend money as they mourned the Sewol ferry sinking on April 16 that left more than 300 passengers dead, the report said.

"There is a possibility that the economy will deviate from the recovery track and go on a sluggish pace," warned the HRI report.

It estimated the exchange rate will decline to a level of 1,000 won per dollar or lower, making local exporting companies face fiercer competition in overseas markets.

A state-run think tank, the Korea Institute of Finance, also revised down the 2014 growth forecast by 0.1 percentage point to 4.1 percent, citing that the ferry disaster may dampen private spending.

"The growth is expected to hit 4.1 percent this year on the back of a gradual recovery in exports, although the domestic demand will continue to crawl," said the KIF in its report.

The KIF said the GDP may fall by 0.08 percentage point because the deadly ferry sinking weighed heavily on private spending.

The central bank had put out a 4 percent growth projection for 2014, up from an earlier 3.8 percent.

The Bank of Korea said Asia's fourth-largest economy grew 3.9 percent on-year in the first three months of the year and that the country's recovery pace remains intact. (Yonhap)