As the possibility of tertiary infection from the MERS virus is materializing, the Korean economy is sinking deeper into a renewed phase of recession.
Since early this year, the stock and real estate market have slowly revitalized. But they will likely be frozen again due to the outbreak. If MERS (Middle East Respiratory Syndrome) hits certain regions in the world especially hard, there is no telling whether the epidemics of SARS (severe acute respiratory syndrome) in 2003 or bird flu in 2009 wouldn't be reenacted.
The spread of the flu-like syndrome is expected to directly affect the travel industry. According to the Korea Tourism Organization, the number of Chinese tourists who cancelled group tour schedules to Korea has been 2,000 as of June 1. In addition, 500 Taiwanese tourists gave up tours to Korea while 2,500 overseas Chinese people called off their trips to Korea.
By travel agency, 300 Chinese customers cancelled their reservations with Hana Tour, Korea's largest travel agency, for trip scheduled between June 4 and 11. According to Mode Tour, the No. 2 travel agency, the cancellation ratio of Chinese tourists in June reaches as high as 9 percent. Organizers of performing arts also fret they may experience the rerun of the ferry sinking incident in April last year and its aftermaths.
The MERS scare swept the stock market as well. On June 2, the stock price of Hana Tour was closed at 113,000 won, down 8.87 percent from the previous day. Mode Tour saw its share price decline 8.51 percent to 30,650 won. Cosmetic purveyors are also worried that they may become victims of the pandemic.
Hankook Cosmetics and Koreana saw their shares hit the 15-percent daily lower limit while the prices of Able C&C, Kolmar Korea, and Cosmax fell about 7 percent each. Even AmorePacific, the largest cosmetic company in Korea, saw its stock price fall 4.52 percent on the same day.
Lim Hee-jeong, senior research fellow with Hyundai Economic Research Institute, said, "In a fragile economic environment like now, even small shocks may cause a big impact. If the government fails to respond properly to the MERS epidemic, it will likely affect the economy negatively in the second half and beyond."
