Worse Than During MERS... Is the New Coronavirus a Consumption Black Hole?

May-June 2015 When MERS First Occurred
Some Sectors Including Medical, Large Discount Stores, and Leisure Industries Impacted

On the 11th, visitors at the National Medical Center in Jung-gu, Seoul, are wearing masks to prevent the spread of the novel coronavirus./Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Ki Ha-young] As the novel coronavirus infection (Wuhan pneumonia) spreads, concerns about a domestic economic downturn are growing. If the situation prolongs, the impact is expected to be greater than during the Middle East Respiratory Syndrome (MERS) outbreak in 2015.

On the 11th, according to the Credit Finance Association's submission to the National Assembly on 'Credit and Debit Card Merchant Approval Performance (Weekend Basis)', the card usage amount on the weekend of the Lunar New Year holiday, the 25th-26th, was 2.0867 trillion won, a sharp drop of 44.6% compared to the weekend right before the holiday (18th-19th), which was 3.7667 trillion won.

During MERS, which is often compared to the novel coronavirus, the consumption situation was relatively stable. According to the Credit Finance Research Institute, during MERS when the first confirmed case appeared on May 20, 2015, card approval amounts decreased only in certain sectors such as medical, large discount stores, and leisure industries from mid-May to June.

Rather than an overall decrease in card usage, there were clear differences by industry. In particular, card approval amounts decreased in medical, travel agencies, and airlines from mid-May (16th-31st). The total card approval amount for the medical sector in May of that year increased by 4.6% compared to the previous year, but due to growing concerns and anxiety about MERS, the amount declined by 1.7% compared to the same period last year after mid-May. During the same period, the total card approval amount for travel agencies and airlines also decreased by 2.9% year-on-year due to reduced travel activities caused by MERS.

Especially in June 2015, when MERS was rampant, the card approval amount for general hospitals dropped significantly from 771.7 billion won to 664.8 billion won, a 13.8% decrease compared to the previous year. This was due to the perception of general hospitals as the source of the MERS outbreak. Leisure industries such as amusement parks and water parks also suffered a heavy blow, with card approval amounts plunging from 42.1 billion won to 23.8 billion won, a 43.6% decrease year-on-year. The transportation sector and large discount stores also saw card approval amounts decline by 0.6% and 6.2%, respectively, compared to the same period last year.

However, from May to June, when MERS spread, the total card approval amount did not differ significantly. In May 2015, the total card approval amount across all industries was 51.76 trillion won, an increase of 7.1% compared to the previous year. In June 2015, it was 50.85 trillion won, up 8.6% year-on-year.

But this novel coronavirus is expected to cause greater damage than MERS. This is because it is more contagious than MERS and retail industry closures are continuing. An industry insider said, "During the MERS outbreak, consumer sentiment was expected to shrink and the growth rate of card approval amounts to slow down, but the impact was limited to certain industries," adding, "In the case of this novel coronavirus, while the situation needs to be monitored, people are reluctant to go out, so card approval amounts centered on offline merchants are likely to have decreased."

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