South Korea: Outbreak of MERS hits spending and tourism

SEOUL, South Korea — South Korea’s finance ministry said yesterday that economic growth will slow this year as the outbreak of Middle East Respiratory Syndrome (MERS) hits spending and tourism.

SEOUL, South Korea — South Korea’s finance ministry said yesterday that economic growth will slow this year as the outbreak of Middle East Respiratory Syndrome (MERS) hits spending and tourism.

An additional two patients have succumbed to the virus, bringing the death toll to 29. There was one new confirmed case of infection, taking the total number of confirmed cases to 180.

“Even after the MERS outbreak calms down, there could be a negative impact on the entire economy,” Finance Minister Choi Kyung-hwan said in a televised news conference yesterday. “We can’t say the MERS situation has completely come to an end unless the economy revives.”

The ministry cut its outlook for economic growth this year from 3.8 per cent to 3.1 percent. South Korea, Asia’s fourth-largest economy, grew 3.3 percent last year.

The Finance Ministry revealed that the MERS outbreak had a bigger effect on the economy than the ferry disaster last year, which plunged the country into mourning. Not only have more than 120,000 tourists cancelled their trips, sales at department stores have also fallen almost 30 percent in the first two weeks of the outbreak from the previous fortnight as shoppers stayed at home. That compares with the 8.7 percent contraction in the two-weeks after the Sewol ferry disaster, where 304 people died, most of them students.

South Korean officials also revealed that they were planning an economic stimulus package of more than 15 trillion won (S$18.1 billion) to ensure that growth does not fall below 3 percent. The stimulus will target businesses that were hit by the MERS outbreak as well as a recent drought. Mr Choi said the extra move was crucial as a recovery in South Korea hinges on efforts to quickly contain the effects of MERS.

South Korea’s central bank cut its key interest rate to a record low of 1.5 percent earlier this month.

In a move that seems to be a response to criticism that the authorities took too long to trace and isolate people exposed to MERS, hospitals are now required to track all emergency ward visitors. “This issue has been raised as one of the biggest problems,” Health Ministry official Kwon Deok-cheol said, adding that the ministry was reviewing a more permanent legal approach to this issue.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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