Samsung will account for half of South Korea’s economic growth
Its unrivalled position in the country means that its troubles have major implications on GDP and consumption, among others, an economist says
SAMSUNG Electronics is poised to account for about half of South Korea’s economic growth this year, making its biggest contribution on record, Bloomberg Economics said.
The commentary underscored the company’s significance in an economy that ebbs and flows with the global semiconductor industry.
Samsung is South Korea’s largest company, accounting for about 8 per cent of manufacturing output and 17 per cent of the main stock index’s total market capitalisation.
Based on its South Korea-based units’ gross profit, the company will likely be responsible for 1.1 percentage points of the 2.2 per cent growth that the economy is expected to post this year, Bloomberg Economics economist Hyosung Kwon said on Friday (Nov 11) in an analysis based on a series of data available since 2008.
The report showed the importance of Samsung’s efforts to secure orders for high-bandwidth memory from Nvidia and other developers of computer processors that power artificial-intelligence development.
It also highlighted the concentration of influence that Samsung has over Asia’s fourth-largest economy after global demand for memory chips increased.
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The world’s largest memory-chip producer has rebounded this year from a semiconductor slump that Bloomberg Economics says shaved 1.2 percentage points off the growth in gross domestic product in 2023.
Bank of Korea (BOK) governor Rhee Chang-yong said last month that GDP growth could moderate closer to 2.2 per cent this year, from a previous projection of 2.4 per cent after the economy barely expanded last quarter.
Economist Kwon added: “The firm’s unrivalled position in South Korea means its troubles aren’t just a corporate hiccup. They have major implications for GDP, consumption, fiscal health and employment.”
Global memory-chip demand is a key barometer watched by monetary authorities as they adjust the course of their policy.
The BOK cut its key interest rate to 3.25 per cent last month and is expected to hold borrowing costs unchanged in November as it assesses the impact of its policy shift. BLOOMBERG
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