The economic losses to South Korea from Chinese reaction over the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system will be $7.5 billion in this year alone, according to a report released Monday by South Korean Hyundai Research Institute, Aju Business Daily based in South Korea reported.
The losses are equivalent to 0.5 percent of the nation's nominal GDP through the end of this year, said the institute.
Bank of Korea said due to the THAAD deployment, South Korean culture and entertainment industry took a big hit, with audiovisual services surplus reaching $179.9 million in the first half year of 2017.
The figure is down 23.2 percent, or $54.3 million, from $234.2 million tallied for the second half of last year and a further drop of $96.2 million from $276.1 million reached in the first half of 2016.
The monthly surplus was $17.5 million in July, the lowest since September 2015.
Audiovisual services include motion picture and video tape production and distribution services, radio and television services, sound recording.
Previously, South Korea had been enjoying an expansion of surpluses in the trade of culture and entertainment content for the past few years, bolstered by the popularity of "hallyu".
Hallyu refers to the demand for Korean music, TV dramas and films, as well as the boom of South Korean goods and services abroad.
South Korea posted a $3.8 million deficit in cultural content exports in 2013, before reporting a surplus of $84 million in the following year. The favorable balance rose to $244.9 million and $513 million in 2015 and 2016, respectively.
As Aju Business Daily reported, the THAAD incident may be the most negative factor to hit the nation's economy this year. The Bank of Korea forecast that South Korea's economic growth rate will be lowered by 0.2 percent this year while employment will be reduced by 25,000.
The industry that will suffer the most from tension with China will be tourism. Hyundai Research Institute said the number of Chinese tourists shrank 40 percent between April and December of this year, with the annual loss for the tourism industry estimated at $6.3 billion. That's 84 percent of the total losses for South Korea in 2017.
The U.S. and South Korean defense ministries agreed in July 2016 that THAAD would need to be deployed by the end of 2017.
That decision triggered concern and protests at home and abroad.
