The International Monetary Fund lowered its forecast for South Korea's economic growth this year to 3.1 percent Wednesday, saying growth momentum has stalled since last year's Sewol ferry disaster.

The latest forecast is down from the 3.3 percent growth the agency forecast in last month's World Economic Outlook report. The IMF has been cutting its forecast for South Korea's gross domestic product growth since October when it predicted 4 percent growth.

"Growth momentum that had been building since early 2013 has stalled," the agency said in a report released after its annual "Article IV Consultation" with South Korea. "A turning point was the April 2014 Sewol ferry accident, which had a surprisingly large and persistent impact on consumer and investor sentiment."

The IMF said that the average quarterly growth rate of Asia's fourth-largest economy declined to about 0.5 percent in the last three quarters of 2014 from about 1 percent in the previous four quarters.

Growth is projected to be in a range centered around 3 percent this year, it said, adding that exceeding the midpoint would require a rebound in aggregate demand, possibly from the lagging effects of the stimulus policies put in place so far and lower oil prices.

"The main external risks include slower-than-expected growth of Korea's main trading partners, the impact of a persistently weak Japanese yen on Korean export industries and side effects from the global financial conditions," the IMF said.

In Seoul, South Korean Finance Minister Choi Kyung-hwan told reporters Thursday the IMF's decision reflects the fact that the country's recovery is not consistent.

"Overall, things are on the mend, although it is equally true that the recovery is not strong," he said.

Recent government data shows industrial output, consumer spending, business investments and employment numbers fluctuating on a monthly basis, while exports, a key growth engine, have been contracting in 2015 from the previous year.

Choi made clear that the government will maintain its present expansionary policy stance until there is solid growth momentum. (Yonhap)