South Korea Q3 GDP hit by Samsung, Hyundai woes
seoul — South Korea’s economic growth is expected to hit the central bank’s 2.7 per cent forecast this year, with third quarter GDP data showing the economy would have grown faster were it not for the setbacks suffered by Samsung Electronics and Hyundai Motors.
“When you take away the effects from Samsung and Hyundai, third-quarter growth was considerably better than expected,” said Chung Kyu-il, a director at the Bank of Korea.
A senior finance ministry official told Reuters later in the day the Samsung Galaxy Note 7 issue alone likely knocked 0.1 to 0.2 percentage points from third quarter growth.
Gross domestic product rose a seasonally adjusted 0.7 per cent over July to September versus the second quarter, the Bank of Korea estimated on Tuesday, ticking down from a 0.8 per cent quarterly rise.
With growth on track, the central bank is more likely to observe than act on monetary policy while looking out for a pending US Federal Reserve rate hike expected by year-end.
Both Chung and the ministry official agreed that fourth quarter growth would also be affected by Samsung’s decision to discontinue production of its fire-prone Galaxy Note 7 smartphone, although the economic impact from lost manufacturing was nearly all reflected in the third quarter.
Manufacturing overall fell one per cent in the third quarter, with Samsung’s smartphone crisis and the worst-ever strikes at Hyundai Motor nearly wiping out the second quarter’s 1.2 per cent rise in factory output.
Despite the strikes ending, there will not be an immediate jump in manufacturing in the fourth quarter, BOK director Chung said, although the central bank’s forecast will be achievable as long as sequential GDP growth hits 0.1 per cent or higher next quarter.