The nation’s central bank head said Wednesday that the negative impact of the outbreak of Middle East respiratory syndrome on private consumption is weakening.
“(Like the first and second week), data showed that private consumption during the third week also fell on an on-year basis. But the reduction extent was found to have tapered compared to the first and second week,” said Bank of Korea Gov. Lee Ju-yeol.
Lee’s remarks, under which he predicts a bounce-back in the domestic demand in the near future, came during his meeting of a group of economists at the BOK headquarters in Seoul.
“The government and the medical staff have carried out a full-fledged effort to extinguish the MERS outbreak,” he said. “It is time to go back to ordinary life, and (I) hope the business and consumer sentiment would improve as soon as possible.”
The BOK, however, made it clear that the governor’s remarks do not mean excessive optimism.
In its official statement, the bank said that “the slump in the service sector will continue for a long period though there were symptoms, since last week, that show a minimal extent easing in the sagging consumption.”
Participants of the governor-economists meeting also shared the view that there still remains uncertainty involving the MERS virus, and the following negative impacts could linger on for a considerable period.
Aside from MERS, Gov. Lee picked the Greek default crisis and the expected interest rate hike in the United States as two other main risks to the Korean economy.
The virus outbreak, in particular, has dealt a critical blow to the retail and tourism industry. Consumers avoided visits to public venues and a great number of foreigners canceled their inbound travel plans on fears of contracting the disease.
Meanwhile, ahead of the Finance Ministry’s coming unveiling of its policy direction for the second-half economy, a main business lobby asked the government to bolster countermeasures against expanded uncertainties.
In its recommendation of 10 urgent economic policy agenda items to the government, the Korea Chamber of Commerce & Industry called on policymakers to provide MERS-hit segments with wider tax benefits.
Commenting on some problems in caring for the MERS-infected patients or dealing with the incident, KCCI also stressed that a drastic overhaul is needed for the overall medical sector. It reiterated the necessity of pushing for deregulation in the establishment of a variety of medical care institutions.
