South Korea's central bank slashed its growth forecast Thursday, predicting the world's 12th-largest economy will contract 1.3 percent this year as it braces for a surge of coronavirus infections.

The Bank of Korea revised down its growth outlook from the estimate of a 0.2-percent fall announced in May. It would mark the first negative growth since the foreign exchange crisis roiled the economy in 1998.

The country had been largely returning to normal after mostly bringing its outbreak under control, but multiple cluster infections in recent days have raised fresh fears over a nationwide pandemic.

The latest projection came as South Korean authorities battle several new coronavirus clusters -- mostly linked to Protestant churches -- reporting 441 new infections on Thursday, the latest in a series of near-six-month highs.

"The recovery of domestic economic growth is likely to be slower than previously forecast, largely due to the domestic resurgence of COVID-19," the bank said in a statement.

"Uncertainties around the future path of GDP growth are also judged to be very high," it added.

The real GDP was forecast to expand 2.8 percent in 2021, lower than the previous outlook of a 3.1-percent increase.

Outlook for headline inflation was set at 0.4 percent this year and 1.0 percent next year respectively.

The central bank left its target rate unchanged at an all-time low of 0.50 percent. The bank cut the rate by 25 basis points in May, after slashing it by 50 basis points in March to tackle the economic downturn from the virus spread.

(With inputs from Xinhua, AFP)