Respiratory Disease Taking Toll on Korean Economy

Middle East respiratory syndrome (MERS) is having a very negative impact on South Korea’s economy, as consumers avoid retail stores, restaurants and other crowded locations. Although the pace of newly reported cases has slowed in recent days, a total of 126 cases have been diagnosed since MERS was first detected in Korea on May 20. Eleven deaths have been attributed to the disease.

In the first week of June, major retailers reported year-over-year declines in sales ranging from 4 to 8 percent, but declines were as high as 20 percent in southern Gyeonggi Province where the highest concentration of MERS cases was reported. Although it is not a food safety issue, the MERS outbreak has also made some retailers reluctant to conduct in-store samplings until consumer concerns subside.

The MERS outbreak prompted South Korean President Park Geun-hye to postpone a trip to Washington, D.C., that was planned for next week. She had been scheduled to meet with President Obama at the White House on June 16.

The Bank of Korea also responded to the MERS outbreak this week, cutting its benchmark interest rate one-quarter of a percentage point to a record-low 1.5 percent amid concerns about the MERS-related slowdown in consumer spending and economic activity.