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S Korea says economy will hit 2016 growth forecast despite Samsung Note 7 risk

Monday, October 17, 2016 - 14:35
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South Korea's economic growth is still expected to meet the government's expectations this year, although recent strikes at Hyundai Motor Co and the discontinuation of Samsung Electronics Co Ltd's Note 7 sales pose risks, the deputy finance minister said on Monday.

[SEOUL] South Korea's economic growth is still expected to meet the government's expectations this year, although recent strikes at Hyundai Motor Co and the discontinuation of Samsung Electronics Co Ltd's Note 7 sales pose risks, the deputy finance minister said on Monday.

Lee Chan-woo told a news briefing on the economy that Samsung Electronics' troubles could have a negative impact on the country's growth, particularly in the second half of the year. "It could have negative effects on the economy. Especially in Samsung's case, this minus effect may be reflected in the third and fourth quarters," Mr Lee said, referring to Samsung's comments last week that it expects to take a roughly US$3 billion (S$4.1 billion) hit to its operating profit over the next two quarters.

Mr Lee said recent strikes at Hyundai, the country's largest carmaker, were a bigger risk. He attributed half of the decline in the country's August industrial output to the strikes which started in the summer and have since ended. "But our economy is not just Samsung and Hyundai. These losses can be made up through consumption and investment." The deputy minister said growth this year would comfortably meet the government's forecast of 2.8 per cent, and exceed that level next year.

Factory output in August fell 2.4 per cent from July, the fastest decline in 19 months.

REUTERS