South Korea’s top central banker on Wednesday raised worries that the local tourism industry is unlikely to recover quickly from the impact of the Middle East Respiratory Syndrome (MERS) outbreak, a setback that may hamper growth in Asia’s fourth-largest economy.
Advertisement
In June, however, the country’s worldwide passenger traffic plunged 12.4 percent on-year to 4.04 million as the outbreak of the potentially deadly disease here has apparently scared off both passengers to and from South Korea.
“There is a chance things will turn around in the third quarter but it will be tough for the economy to grow by over 1 percent as the government now hopes because exports are still bad”, said Huh Jae-hwan, an economist at Daewoo Securities.
Private consumption fell 0.3 percent in quarterly terms, which was the sharpest fall since the second quarter of past year as MERS infected 186 people, 36 of whom died.
On a year-over-year basis, the economy grew 2.2% in the second quarter following a revised 2.5% gain in the first.
The central bank in June slashed the policy rate for a second time this year to a record-low 1.50% to spur anemic growth. The finance ministry also chimed in by slashing its forecast to 3.1 percent from 3.8 percent, while the Korea Institute of Finance cut it to 2.8 percent from 3.7 percent.
Advertisement
Capital investment notched a 0.4 percent gain after a 0.2 percent rise. Exports-accounting for half of the country’s growth-edged up 0.1% in the second quarter, unchanged from the first.
