December 2, 2016 / 6:30 AM / a year ago

South Korea third-quarter GDP growth revised down as Samsung smartphone crisis bites

SEOUL (Reuters) - South Korea’s economy grew a slightly slower 0.6 percent during the July-September quarter in sequential terms, revised data showed on Friday, as handset exports lagged more than expected due to Samsung Electronics killing off its Galaxy Note 7 smartphone earlier this year.

The revision was just below a 0.7 percent rise estimated earlier.

Over a year earlier, South Korea’s gross domestic product expanded by 2.6 percent in the third quarter, Bank of Korea data showed, also marginally lagging the advanced estimate of 2.7 percent released on Oct. 25.

In the second quarter, GDP grew by 0.8 percent in sequential terms and 3.3 percent on-year.

“Smartphone exports had a considerable impact on third quarter growth,” Kim Young-tai, director of BOK’s national accounts division, told reporters on the sidelines of a briefing.

“They fell more than expected when we looked more closely into the data.”

Friday’s data showed exports in the third quarter rose 0.6 percent on-quarter in seasonally adjusted terms, down from 0.8 percent estimated earlier in October.

Samsung Electronics’ scrubbing of its fire-prone Galaxy Note 7 smartphone was largely expected to affect third-quarter growth, but officials say the effect could bleed over into the following quarter.

Although construction rose a far slower 3.7 percent in the July-September period than 4.4 percent estimated in quarterly terms, Kim said construction was expected to contribute to growth for the time being.

Annual construction growth was revised to 10.6 percent in the third quarter from the 11.4 percent first estimated.

The official declined to give his views on growth in the fourth quarter, although he said the economy would have to grow between 0.1 percent to 0.4 percent in the October-December period in sequential terms to achieve the central bank’s growth forecast of 2.7 percent for this year.

Reporting by Christine Kim

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