Fear of Wuhan Pneumonia Spreads in China... Impact on Global and South Korean Economies

[Asia Economy Reporter Kim Min-young] There are concerns that if the Wuhan pneumonia spreads like the Severe Acute Respiratory Syndrome (SARS) that swept the world in 2003, it could affect not only the global economy but also South Korea's economy, including a decrease in gross domestic product (GDP).

In a recent report titled 'Current Status and Countermeasures of the Unknown Cause Pneumonia Originating from China' published by the Korea Institute for International Economic Policy (KIEP), it was estimated that due to the impact of SARS, the export growth rate in May 2003 (3.5%) contracted, causing South Korea's Q2 GDP growth rate to fall by about 1 percentage point (annual growth rate by 0.25 percentage points).

There are also concerns about consumption contraction due to a decrease in tourists. In fact, the number of Chinese tourists, which was about 539,400 in 2002, decreased to about 512,700 in 2003 due to SARS. Recently, with the easing atmosphere of the Hanhanryeong (限韓令), expectations are high that consumption of cosmetics and other products will increase, but there is also a possibility that Wuhan pneumonia could lead to a decrease in tourists → contraction in consumption. The government mentioned in the 'Recent Economic Trends (Greenbook)' briefing that "the number of Chinese tourists in December increased by 26.9% compared to a year ago," and that the recovery of Chinese tourists is expected to have a positive effect on retail sales.

Interest also lies in how it will affect not only the domestic but also the global economy. Professor Lee Jong-hwa of Korea and Warwick McKibbin estimated in a paper that the economic loss caused by SARS in 2003 was $40 billion. The International Air Transport Association (IATA) estimated in an economic briefing in May 2006 that SARS caused a 0.1% decrease in global GDP. Wuhan pneumonia is also considered to be highly contagious like SARS, potentially affecting population movement and economic activities.

KIEP advised, "We need to pre-check and strengthen preparations such as government responses and domestic quarantine reinforcement measures in the event of SARS occurrence in 2003," and "It is necessary to continuously monitor the situation in China and check intergovernmental cooperation channels if necessary." They further explained, "With the upcoming large-scale migration during China's biggest holiday, the Lunar New Year, if pneumonia symptoms spread, it could have a significant impact on economic activities within China, so continuous monitoring is necessary."

This content was produced with the assistance of AI translation services.