South Korea's finance minister warned that an all-out trade war between the US and China would have grim implications for the country, as he lowered this year's growth outlook Wednesday.

The world's 11th largest economy is expected to grow 2.9 percent this year, lower than an earlier estimate of three percent, Kim Dong-yeon said, citing slowing demand at home and abroad as well as rising unemployment.

The latest estimate is also lower than last year's figures, when the export-reliant economy expanded 3.1 percent, and comes as the South's top two trading partners China and the US engage in a bitter spat that has seen them impose hefty tariffs on billions of dollars in goods.

"The economic situation down the road does not seem to be bright," Kim told reporters.

"The situation may get worse if anxiety in the international financial markets spreads due to the US-China trade dispute... and market and corporate sentiment does not improve," he said.

Overseas shipments account for more than half of the South's economy, with more than a quarter of exports shipped to China and about 12 percent to the US.

Kim vowed to "closely monitor international trade situations including the US-China trade row" and announced measures to encourage job creation and spur domestic spending.

US President Donald Trump has taken a confrontational "America First" stance on trade policy, imposing steep tariffs on steel and aluminum, which angered allies and prompted swift retaliation, as well as 25 percent duties on $34 billion of Chinese goods, with more on the way.

China has matched US tariffs dollar-for-dollar and threatened to take further measures, while US exports face retaliatory border taxes from Canada, Mexico and the European Union.

The International Monetary Fund said this week the growing trade confrontation is the "greatest near-term threat to global growth" and in the worst case could cut a half point off world GDP.

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China's trade surplus with US swells in June
Beijing (AFP) July 13, 2018
China's surplus with the United States hit a record last month, data showed Friday, adding to brewing tensions between the economic superpowers as they stand on the brink of an all-out trade war that Beijing warned would have a "negative impact" globally. The figures come after the two sides exchanged tit-for-tat tariffs on billions of dollars worth of goods and US President Donald Trump threatened to up the ante with measures on a further $200 billion of Chinese imports. Beijing said China's su ... read more