Ministry of Economy and Finance: "The Economic Impact of COVID-19 Depends on the Extent of Spread... Could Be Faster and Larger Than MERS and SARS"

The scene of a department store in downtown Seoul on the afternoon of the 11th. It is a quiet situation due to the impact of the novel coronavirus infection.

[Sejong=Asia Economy Reporter Joo Sang-don] The government expressed concerns that the impact of the novel coronavirus disease 2019 (COVID-19) on the Korean economy may vary depending on the extent and duration of its spread, but warned that the negative effects could appear faster and more significantly than those seen during the Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS) outbreaks in the past.

On the 14th, Hong Min-seok, head of the Economic Analysis Division at the Ministry of Strategy and Finance, announced the "Recent Economic Trends February Issue (Green Book)" and said, "When comparing this COVID-19 outbreak with MERS and SARS, the level of human, material, and economic exchanges between the affected countries and Korea is incomparable," adding, "Moreover, with the development of social media, the shock caused by infectious diseases is now reflected more quickly in economic indicators."

The Green Book expressed concerns that "depending on the extent and duration of the recent COVID-19 spread, the growth of the global economy, including China, and the recovery trend of our economy may be constrained."

During the 2015 MERS outbreak, Saudi Arabia accounted for only 0.1% of total tourists, but now China accounts for 34.4%. Additionally, the export share is significantly different, with Saudi Arabia and China accounting for 1.8% and 25%, respectively. Compared to the SARS outbreak period, Korea's export share to China has increased by more than 10 percentage points from 14.6%. Given the close economic ties with China, the shockwave could be greater.

Hong said, "The first domestic confirmed case occurred on the 20th of last month, and since then, much of the period was the Lunar New Year holiday, so the January indicators were not significantly affected," adding, "We are currently monitoring over 30 indicators daily, including credit card approval amounts, department stores and marts, tourist numbers, railway and highway traffic volumes, amusement parks, and movie theater attendance."

Regarding the economic situation as of the end of January this year, the government gave a more positive assessment than the previous month. After excluding the term 'sluggish' for four consecutive months following seven months of its use from the April to October issues last year, the diagnosis of an 'adjustment phase' that was mentioned only for exports and construction investment was changed to an overall 'improvement' and 'recovery' level. Although total export value last month decreased by 6.1% year-on-year, the average daily exports excluding working days increased by 4.8%. This marks the first increase in average daily export value in 14 months. However, the export price index in January was 96.59, down 0.8% from the previous month (97.41). The average won-dollar exchange rate last month was 1,164.28 won, a 1.0% decrease from the previous month (1,175.84 won), leading to a decline in export prices centered on coal and petroleum products, computers, and electronic optical devices. In particular, influenced by the exchange rate, the export price of DRAM also fell (-2.5%).

Hong predicted, "The impact on our economy will vary depending on the end time of the outbreak," and added, "As was the case with MERS, economic indicators that had slowed down may rebound sharply once the infectious disease ends."

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