MERS Outbreak Affects South Korean Economy

June 11, 2015South Koreaby EW News Desk Team

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South Korea is plagued with a rising death toll in its third week as the MERS virus spreads throughout the country. Analysts believe the outbreak will worsen the economy, as tourists stay away and locals remain at home. South Korea's economy underwent turmoil before the outbreak, due to low exports and consumption.

The situation in South Korean is dire to the point where President Park Geun-hye canceled a trip to the United States to tackle the crisis. More deaths have been reported this week, bringing the official death toll to 10. Over 100 cases have been identified in South Korea, and the nation now has the second most MERS cases behind Saudi Arabia. MERS, otherwise known as Middle East Respiratory Syndrome, is a coronavirus virus that was first reported in humans in 2012, but most cases have been seen in Saudi Arabia. The virus comes from the same family as Severe Acute Respiratory Syndrome (SARS), but it is not as contagious. Symptoms associated with MERS include coughing and a fever. So far, the World Health Organization (WHO) has not called for a ban on travel or trade with South Korea, but Hong Kong cautioned against non-essential travel to the nation. Many travelers have already canceled trips to South Korea.

In response to the outbreak, South Korean officials pledged to counter the economic impact, which may include fiscal and monetary measures, but the specifics have been scant thus far. Private and tourist consumption has gone down, and authorities are concerned about investment decline. Restaurants and theaters have been closing throughout the nation, and local economies have been especially hit hard. Gyeonggi Province, a place where the infection is most prevalent, is pledging 84.1 billion won ($74.94 million) to businesses in response to the outbreak, according to Reuters.

Deputy Prime Minister Choi Kyung-hwan urged consumers to keep spending, while pledging 400 billion won ($357 million) in stimulus to support regions affected by the virus. Head of the ruling Saenuri party, Kim Moo-sung, urges fellow Koreans to continue daily life as normal and not cave in to mass hysteria in order to keep the economy stimulated. South Korea's central bank cut rates to a record low of 1.50 percent on Thursday to curb the effects of lower consumption, and Bank of Korea Governor Lee Ju-yeol stated that the cut was done to mitigate the economic impact from the outbreak. South Korea's government will have to work that much harder to keep the economy from getting worse. South Korea still suffers from high debt and a stronger won that hurts exporters and companies.

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