Samsung’s failure may hit South Korea’s GDP

Samsung Electronics said on Friday it expected to take a hit of about 3.5 trillion won ($3.1 billion) to its operating profit over the next two quarters from the fallout of its bungled Galaxy Note 7 recall.

The negative impact will not shock otherwise the Korean company that focuses on the sales of other handsets to cushion the failure of Galaxy Note 7.
Ratings agency Moody's said this week that the production halt and recall of the Note 7 were credit negative for Samsung, while Fitch Ratings believes that Samsung’s balance sheet will remain healthy, due to the support of ‘strong liquidity and relatively low debt’.

The company asked consumers to switch off all Note7 devices on Tuesday and has stopped production and sales of the model, discontinuing it altogether. However, the electronics giant will offer up to $100 in bill credit to consumers who exchange their Note 7s for any of its smartphone models in the US. American customers who exchange their Note 7s for a refund or other branded smartphone will receive $25 in bill credit. 

Samsung's flop could weigh on the asiatic country. 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. On Thursday, BoK lowered the country’s forecast for gross domestic product for the current year to 2.8% from 2.9% three months ago.

"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.