Note 7 recall hits South Korea's economic growth

Samsung's recall of the Galaxy Note 7 has slowed South Korea's quarterly growth to its lowest level in over a year.

South Korea's economic growth for Q3 has slipped to its lowest level in more than a year, with Samsung's recall of the Galaxy Note 7 having had an impact.

Bank of Korea said on Tuesday that Asia's fourth-largest economy expanded 2.7 percent during the July-September quarter from a year before, the slowest growth since Q2 2015.

Growth from the previous quarter was 0.7 percent and on a quarter-to-quarter basis, the country's economy has grown less than 1 percent in the last year.

According to Korea's central bank, the manufacturing sector declined as a result of slumping handset sales from Samsung's Galaxy Note 7 recall.

Samsung is now offering customers a Galaxy S7 or S7 Edge as a replacement for the Note 7 devices, with the addition of a refund covering the price difference. Alternatively, owners can request a full refund.

The company revealed this week that a Galaxy Note 8 is officially planned for next year, and as part of an upgrade program it will be offered to Korean customers at a discounted price.

The monthly discount of up to 50 percent will be for customers who exchanged their faulty Note 7 for a Galaxy S7 or S7 Edge.

Those who join the Galaxy Upgrade Program, after signing a two-year contract and paying the monthly fee for 12 months, can change their S7 or S7 Edge for a Galaxy S8 or Galaxy Note 8 for free.

Samsung suspended production of the Galaxy Note 7 and earlier this month pulled the plug on the handset entirely due to recurrent issues of exploding batteries.

Samsung and the South Korean government have launched separate investigations into the exploding Note 7s.

Samsung expects a profit cut of around $3 billion until Q1 2017 with the whole Note 7 saga expected to cost the company nearly $5 billion.

Officials from local telcos have said that Korean sales of Apple's iPhone 7 benefitted from the Note 7 recall, with 200,000 units sold in the country as of Monday, four days since sales began.

With AAP

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