S. Korea Plans $13.5 Bln Stimulus To Counter MERS Outbreak
25 June 2015 - 5:10PM
RTTF1
South Korea is planning a stimulus package to counter potential
economic slowdown that would stem from weak exports and the
negative impact of the Middle East Respiratory Syndrome (MERS)
outbreak.
The finance ministry on Thursday announced a $13.5 billion
stimulus, which include an unspecified supplementary budget, and
downgraded its growth and inflation outlook.
The ministry lowered its growth forecast for 2015 to 3.1 percent
from 3.8 percent and inflation projection to 0.7 percent from 2
percent. The economy is forecast to expand 3.5 percent next
year.
Exports are forecast to shrink 1.5 percent this year and imports
to fall 7 percent largely due to falling oil prices. The current
account surplus is seen rising to $94 billion this year.
The outbreak of disease in Asia's fourth-largest economy has
reduced consumer spending and tourist arrivals amid drought in many
areas.
The government announcement came after the central bank cut its
key rate to a record low 1.5 percent earlier this month to spur
consumer spending and exports.
The MERS disease has affected 180 and killed 29 people since May
20. Consequently, more than 120,000 tourists canceled their visit
to South Korea.
In June, consumer confidence fell to its lowest level since late
2012, data released by the Bank of Korea showed today. The index
came in at 99 versus 105 in the previous month.
The ministry said with the recovery momentum yet to be firm
enough due to sluggish exports, the outbreak of the MERS can lead
the economy to undershoot its expected growth path.