The South Korean government said it is ready to take swift measures to counter the negative effects on its economy from an outbreak of a deadly respiratory disease, suggesting that worried policymakers may soon deliver monetary and fiscal stimulus. President Park Geun-hye said the negative economic effects from the outbreak of Middle East Respiratory Syndrome (MERS) should not be overlooked, while Finance Minister Choi vowed to take steps to offset any hit to growth.
The effect from MERS on private consumption cannot be overlooked as spending and tourism are quickly shrinking.
President Park Geun-hye
Backing the government’s stance, Gyeonggi Province - where most of the infections are concentrated - announced on Monday it would provide 84.1 billion won ($74.94 million) worth of funding for small-to-medium sized businesses in the area. The outbreak has prompted analysts to wager on another rate cut as early as at this week’s Bank of Korea policy review, with some predicting more support from the government in the form of stimulus worth billions of dollars. Earlier on Monday, the ruling Saenuri Party head Kim Moo-sung claimed that during the weekend, tours and events were canceled and places like markets, theatres and restaurants were empty.Asia’s fourth-largest economy is already tottering amid a collapse in exports and slow consumption.