South Korea’s central bank is worried about Samsung.
Earlier on Thursday, the Bank of Korea held its benchmark interest rate at 1.25%, as expected, and said it saw “uncertainties surrounding the growth path to be high.”
The bank kept this year’s growth forecast unchanged at 2.7%, but revised next year’s growth forecast down to 2.8% from 2.9%.
Samsung Electronics recently scrapped production of the Galaxy Note 7 after a recall in the wake of several of the smartphones catching fire after charging. Bank of Korea Governor Lee Ju-yeol said that the electronics giant’s cancellation of one of its flagship phones could affect the economy, although the bank needed more time to assess the situation, according to Bloomberg.
“Samsung’s problems were calculated into Thursday’s revisions to the BOK’s economic forecasts that include growth and inflation rates, he said, but the bank was not able to reflect the most recent changes because of time constraints,” according to Reuters.
The issues at Samsung and a strike by automobile workers contributed to a drop in shipments of electronics and vehicles for the month of September, wrote Capital Economics’ Asia economist Krystal Tan in a note to clients.
And a BMI Research team argued on Thursday that they “expect Korean exports to face persistent headwinds following the fallout from safety issues surrounding Samsung’s flagship Note 7 smartphone.”
“We expect the BoK will seek to cushion the broader economy from the impact of the ongoing corporate restructuring of the country’s ailing shipbuilders as well as the expected decline in exports due to the fallout from safety concerns over Samsung’s products,” they added.
The Korean won finished down 1.1% at 1,135.85 per dollar.