Hyundai Economic Research Institute "New Coronavirus Crisis, This Year's Growth Rate Down by 0.1~0.2%p"

Analysis suggests that the South Korean economic growth rate this year will face a downward pressure of about 0.1~0.2 percentage points due to the novel coronavirus infection (Wuhan pneumonia) outbreak. The Hyundai Research Institute (HRI) forecasted this in its report titled 'The Impact of the Novel Coronavirus Infection on the Korean Economy,' published on the 30th.

HRI first analyzed the economic impact assuming two scenarios: ▲the novel coronavirus outbreak is concentrated within China ▲the outbreak spreads further into South Korea beyond China.

The tourism sector is expected to be the most severely affected initially. According to HRI, if the novel coronavirus remains confined to China, the number of foreign tourists from January to April is estimated to decrease by 616,000, resulting in a loss of about 900 billion KRW in tourism revenue. Furthermore, HRI projected that if the virus spreads domestically in South Korea, the number of foreign tourists could drop by 2,021,000, and tourism revenue could decrease by up to 2.9 trillion KRW.

Exports are also inevitably expected to suffer significant damage. HRI predicted that if the economic growth rate in China falls by 0.3~0.5 percentage points in the first quarter due to the spread of the novel coronavirus, South Korea's export growth rate to China could face a downward pressure of about 0.48~0.8 percentage points. As a result, the nominal export value domestically is expected to decrease by approximately 150 million to 250 million USD.

Domestic consumption in the first quarter is also estimated to decline by 0.1 percentage points if the novel coronavirus spread is limited to China. However, if the spread accelerates within South Korea, the decline could widen to as much as 0.3~0.4 percentage points.

Regarding this, HRI stated, "The novel coronavirus outbreak is expected to exert a downward pressure of 0.1~0.2 percentage points on South Korea's economic growth rate this year," adding, "If the virus spreads rapidly within South Korea, the decrease could reach up to 0.7 percentage points."

Accordingly, HRI called for ▲a strong government commitment and expression of confidence to prevent the contraction of private economic sentiment ▲flexible and effective policy responses such as a 'Middle East Respiratory Syndrome (MERS) super supplementary budget.'

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