A massive recall of Samsung smartphones and strikes at Hyundai Motor took a toll on South Korea’s economy in the third quarter, with the slowest growth in more than a year.
Asia’s fourth-largest economy expanded 2.7 percent on-year in the July-to-September period — the weakest pace since the second quarter of last year — the central Bank of Korea (BOK) said yesterday.
“Growth in manufacturing slowed considerably, as halted production of Samsung’s Galaxy Note 7 and strikes at Hyundai Motor hit overall production, consumption and exports of the auto and smartphone industries,” BOK director Chung Kyu-il said.
Photo: Reuters
“Losses linked with the Note 7 ... may have further impacts on the fourth-quarter growth as well,” he said.
The BOK estimates this year’s growth outlook at 2.7 percent.
Samsung — the world’s top smartphone maker and South Korea’s biggest firm by value accounting for about 17 percent of GDP — announced the recall of 2.5 million Note 7s after reports of the devices catching fire.
When replacement phones also started burning up, the company opted to take a multibillion-dollar profit hit and scrap the high-end smartphone altogether.
Tens of thousands of workers at Hyundai — South Korea’s top automaker — staged full or partial strikes for several weeks from July through this month demanding higher wages.
The firm estimated the loss caused by the actions at more than 3 trillion won (US$2.6 billion).
South Korea has been struggling to keep its economy afloat as it is buffeted by the global economic slowdown, with the central bank keeping its key interest rate at a record low in a bid to spur domestic spending.
The BOK earlier this month cut the country’s growth outlook for next year to 2.8 percent from 2.9 percent, having considered the potential impact of the Samsung’s recall crisis.
The nation’s economy expanded 2.6 percent last year — the lowest since 2012.
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