Coronavirus Could Devastate Korea's Economy

      February 10, 2020 13:30

      Global economic research institutes are forecasting that China's economy will grow less than one percent in the first quarter of this year after the hammer blow of the coronavirus outbreak. And when China sneezes, Korea catches cold. During the Severe Acute Respiratory Syndrome and Middle East Respiratory Syndrome epidemics, Korea's economic growth declined between 0.2 to 0.25 percentage points, and the impact of the coronavirus epidemic will surpass that. Korea's economy grew just two percent in 2019, so it can count itself lucky if it grows more than one percent this year.

      Domestic consumption has already begun to shrink. Malls, outdoor markets, restaurants and movie theaters have emptied, while the number of people using the Seoul subway system has declined by more than 15 percent since the break compared to usual numbers. Departments stores such as Lotte and Shinsegae are expected to lose billions of won in revenues, while the number of moviegoers last month fell 28 percent compared to the same period of 2017, when the Lunar New Year holiday also fell in January. Factories are grinding to a halt due to the stoppage of parts supplies from China. Businesses here were already reeling from the anti-corporate policies of the government and could now find themselves facing a major emergency due to the impact of the China shock on manufacturing, consumption and exports.

      The government is busy telling people there is no need to be worried about coronavirus, and it is true that panicking helps nobody. But to fight the outbreak effectively, the government must at least resolve basic problems like supplying enough surgical masks. Supplies are still short and prices have gone through the roof. As it reviews its quarantine measures, the government must come up with ways to instill hope among businesses by implementing new economic policies.

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