SEOUL, Korea, Republic Of – South Korea’s central bank cut its forecast on the country’s economy Thursday, citing mounting uncertainties from the U.S.-China trade battle.

The Bank of Korea said it lowered its growth outlook on Asia’s fourth-largest economy to 2.9 per cent this year, compared with its earlier forecast of 3 per cent growth.

The bank said the spiraling trade battles between the world’s two largest economies increased potential risks to South Korea.

“Uncertainties in growth path are higher than ever and the major source of the uncertainties is global trade conflicts,” Bank of Korea Governor Lee Ju-yeol told a news conference. “At first we thought the trade conflicts among major economies would not grow further, but as they deepen day by day, now it’s very difficult to tell where they’re headed to.”

If the U.S. delivers on threats such as imposing additional tariffs on Chinese imports and imported vehicles, impact on South Korea’s exports will not be small, Lee said.

Worse-than-expected job rates and slower capital expenditure also contributed to the central bank’s downward growth revision.

South Korea’s growth is expected to further slow in 2019. The Bank of Korea said that the economy is likely to grow 2.8 per cent next year.