South Korea trimmed its 2017 GDP growth estimate on Thursday, confirming fears that the impact of the Samsung Galaxy Note 7 blowout was not limited to the smartphone giant alone.
The South Korean central bank said on Thursday it was cutting 2017 growth outlook to 2.8 percent from 2.9 percent, taking into account the potential impact of Samsung's Note7 crisis on the national economy.
"Because it makes up such a large portion of our economy, we considered the impact from the disruptions in its production in our forecast," Bank of Korea Governor Lee Ju-Yeol said after the monthly monetary policy meeting.
Samsung accounts for around 17 percent of the country's gross domestic product – not for nothing that South Korea has acquired the sobriquet the 'Republic of Samsung'.
The smartphone company, which gave iPhone maker Apple a run for its money, has been hit hard by the phenomenal collapse of its ambitious Note 7 device. The shares tanked after Samsung announced the decision to kill the troubled flagship device.
The world's biggest smartphone company was battered by multiple instances of Note 7 battery explosions. Samsung started a massive recall programme in September after instances of the device catching fire, sometimes aboard passenger planes, were reported from around the world.
However, things got worse for the company as several Note 7 replacement units were also found catching fire. This led to US mobile networks stopping the sale and replacement of the phone.
Bracing for uncertainties
Announcing the downward revision of the growth outlook, the central bank governor also added the uncertainties facing the economy were high. The monetary policymakers also held the key interest rate at a record-low 1.25 percent for the fourth consecutive month.
Analysts say the slashing of the outlook came at a time when South Korea's economy was bracing for the impact of a possible interest rate hike in the US.