ed Chill from MERS scare

The entire nation almost came to a grinding halt over the weekend as fears of MERS, or Middle East Respiratory Syndrome, continued to spread.

The number of holidaymakers visiting resorts and amusement parks in Seoul and the metropolitan area dipped and there was even a sense of desolation. The number of visitors to Lotte World in southeastern Seoul remained at 40 percent of the average total, and the number of spectators at a nearby baseball stadium was less than half what it was a week ago. Moreover, sports and cultural events scheduled for the weekend have been cancelled or postponed.

Now there is a growing concern that the MERS scare might deal a fatal blow to the economy, which has already been struggling with falling exports and depressed domestic demand. Of course there have yet to be economic statistics reflecting the MERS situation, but its impact on retail sales and tourism appears real.

Sales at department stores and discount outlets have declined sharply amid reports that an E-mart store in Pyeongtaek, Gyeonggi Province, where a number of MERS patients were reported, suffered a 25-percent sales drop.

The situation is far worse in the travel industry, which had been enjoying a massive influx of Chinese tourists. The Korea Tourism Organization estimates the number of Chinese travelers who have chosen not to visit Korea because of the MERS outbreak at over 20,000 and raised the possibility that this could surpass 100,000 through the end of June.

Against this gloomy backdrop, there are mounting calls for additional stimulus measures amid skepticism that this year’s economic growth might fall short of the government’s lowered target of 3 percent.

Strategy and Finance Minister Choi Kyung-hwan admitted Monday that the contagious virus could have a negative impact on the economy but remained cautious about additional pump-priming measures. Bank of Korea Governor Lee Ju-yeol told reporters Monday that he will take into account "all factors’" when the central bank holds a monthly rate-setting meeting Thursday.

For now it seems hard to predict how policymakers will act to address the MERS fallout, but they need to keep in mind that the recent string of interest rate cuts has failed to rejuvenate the anemic economy. It might be improper to resort to stimulus at a time when people hate to go out because of public panic.

So it will be critical to convince the public that many of their fears ― airborne transmission, for example ― are unwarranted. If not, the MERS scare might weaken economic activity more painfully than the sinking of the Sewol ferry that killed more than 300 people last year.

Nevertheless, the government needs to brace for the worst on the assumption that the MERS situation could be extensive and spread further.