[EDITORIALS]SARS infects the economyKorea has been insulated from severe acute respiratory syndrome, or SARS, the mysterious disease that has claimed hundreds of lives around the world. But the disease seems to be poised to plague the Korean economy with power comparable to the impact of the North Korean nuclear programs.
We had hopes for the economy, thanks to an early end to the war in Iraq and the increased chance that North Korean nuclear issues would be addressed through dialogue, but SARS is likely to dash the expectations for economic recovery. Historically, the emergence of a new disease often leads to many deaths. But when the repercussions are felt in the economy, many more suffer.
The World Health Organization estimates that SARS has inflicted about $30 billion in damage on the world economy. Asia, the biggest victim of the disease, is the most dynamic market in the world and is a strategic export market for Korea.
China, the factory of the world, seems likely to see economic growth slow as production and consumption shrink. Korean companies operating in China have cut their working days and increased holidays out of fear that SARS may spread further. If exports, consumption and investment are all hit hard, Korea’s economy may suffer incalculable damage.
Tourism is down. Air travel is down. Foreign investment is sluggish, and stock markets are trembling. If SARS fears are not allayed, commodities and raw material supplies will be disrupted, which is why government measures are needed.
SARS is still a mystery disease. The government must look at long-term measures, not makeshift policies. Seoul has said that it will examine the macroeconomic effects of the disease; it should decide what to do after taking into account all the factors, including the North Korea factor, before deciding whether to seek a supplemental budget earlier than planned or whether to cut interest rates.
The government should not underestimate the shock of SARS. How well we cope will be a measure of our society’s resilience, and we should all cooperate.