Global investment banks have lowered their growth forecasts for South Korea as it faces a double whammy of lethargic consumption and sluggish exports despite a series of rate cuts and plans to jack up fiscal spending, a report showed Thursday.

The average growth estimate by 10 major investment banks for this year reached 2.6 percent, lower than earlier forecasts, according to the report by the Korea Center for International Finance.

The figure is lower than the government's 3.1 percent projection and the central bank's 2.8 percent forecast.

HSBC suggested the bleakest outlook, cutting its forecast to 2.4 percent from 2.8 percent. The banking giant said consumption is likely to remain sluggish on growing household debt and a fall in inbound tourists, while exports also face an uphill battle due to feeble growth in emerging economies.

Nomura painted a relatively rosy picture for the second half, projecting on-quarter growth to reach 0.8 percent in the third quarter and quicken to 1 percent in the fourth quarter. But its annual forecast reached 2.5 percent.

The forecasts by other investment banks also hovered in the mid-to-high 2 percent range. Morgan Stanley suggested 2.5 percent, while Barclays and Citigroup projected 2.6 percent and 2.7 percent growth, respectively, down from their earlier estimates of 3 percent and 2.8 percent.

The downgrades come on the heels of lower-than-expected growth in the second quarter. Citing the impact of Middle East Respiratory Syndrome and a severe drought, the central bank said the Korean economy grew 0.3 percent in the three-month period, sharply slowing from 0.8 percent growth three months earlier.

Things have partly cleared up for Asia's fourth-largest economy. The government recently announced the de facto end of the MERS outbreak, and the National Assembly has approved an 11.6 trillion-won ($10 billion) supplementary budget to spur growth.

But economists say the Korean economy still faces hurdles stemming from structural problems, such as one of the world's fastest aging rates, as well as global economic circumstances that are weighing on trade, the country's main growth engine.

"Despite the four rounds of rate cuts since last year, on-year growth has declined for the fifth consecutive quarter. Economic growth seems to be structurally slowing," said one policy board member in the July 9 minutes released by the Bank of Korea.

Another member said that uncertainties have increased amid a looming rate hike by the United States and sluggish growth in China and other emerging economies. (Yonhap)