Foreign institutions and investment banks lowered their 2015 forecasts for South Korea's economic growth, data showed Monday, as domestic demand remains sluggish and tepid global recovery plus a weakening yen signaled hurdles for exports.

The average outlook for the country's gross domestic product given by 28 foreign institutions came in at 3.5 percent, down 0.3 percentage point from two months earlier. It is also lower than the high 3-percent forecast by the finance ministry and the central bank.

The forecasts made by HSBC and U.S.-based IHS Economics were most negative at 3.1 percent, while French financial group BNP Paribas gave 3.3 percent.

Analysts and economists cited a weakening yen as a downside risk factor for Asia's fourth-largest economy, with Abenomics expected to gain traction in Japan following recent election wins.

Other economists pointed to risks from the Japanese yen's weakness. Nomura economist Kwon Young-sun, who put 2015 growth at 3.5 percent, said Japanese firms will likely see their export competitiveness grow if they invest profits from the favorable currency in research and development.

Morgan Stanley said the weakening yen is also likely to hurt local capital investment while slowing growth in economies other than the U.S. will have negative impacts for the time being.

South Korea's exports to the U.S. have been faring well, growing 24.9 percent on-year in October and 20.8 percent in November. In contrast, exports to China shrank 3.2 percent in November, while exports to the eurozone and Japan have fallen in the past three months.

Local institutions are also moving to trim their growth outlook for next year, but their average forecasts remain slightly optimistic at 3.7 percent.

The finance ministry downgraded its annual growth forecast to 3.8 percent from 4 percent to reflect lingering economic uncertainties, weaker-than-expected consumer spending and investment. 

Earlier this month, Bank of Korea Gov. Lee Ju-yeol also hinted at a downward revision of inflation and growth, citing recent external circumstances such as weakening oil prices. (Yonhap)