South Korea's think tanks and securities firms are projecting South Korea's economy is unlikely to expand over two percent this year due to Japan's trade restrictions.

The government-funded Korea Institute for International Economic Policy recently said in its report that the country's gross domestic product will decrease by point-27 to point-44 percent this year.

The projection is based on the assumption that Japan's July first export curbs of three high-tech materials will lead to a ten percent drop in South Korea's chip production. Tokyo's recent removal of South Korea from its whitelist of countries given preferential trade treatment was not reflected in the projection.

Eugene Investment and Securities expected Japan's trade move will decrease South Korea's economic growth by more than point-six percentage points this year, while Hana Financial Investment projected a decrease of up to point-eight percentage points. The state-run Korea Economic Research Institute predicted a drop of up to three-point-one percentage points.

According to the projections, the country is unlikely to achieve a growth of over two percent this year, although the Bank of Korea recently lowered its growth outlook to two-point-two percent.