The Korea Development Institute (KDI) said in its first-half growth outlook report that the economy is expected to grow 0.2 percent in 2020 before rebounding 3.9 percent in 2021.
This year's outlook was down from a growth forecast of 2.3 percent unveiled six months earlier.
The economy is forecast to contract 0.2 percent in the first half of this year before rising 0.5 percent in the second half, according to the KDI.
If the economy grows 0.2 percent this year, it would be the slowest expansion since 1998 when the foreign exchange crisis roiled the export-driven economy and the economic growth dropped 5.1 percent.
In 2009 when the global financial crisis struck the world economy, South Korea's economy increased 0.8 percent.
The KDI's growth outlook for this year was higher than forecasts of 1.2 percent contraction made by the International Monetary Fund (IMF) and 0.5 percent reduction by the Korea Institute of Finance.
The KDI noted that if corporate failures, household bankruptcies and unemployment occur broadly, the economic recovery would be slow during the post-COVID-19 era, saying uncertainties remain high over the growth path.
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