Spending affected more by MERS
According to the Monetary Policy Report released by the Bank of Korea on Tuesday, the MERS outbreak, which killed 36 people and infected another 186 people earlier this year, not only had a larger impact on consumer sentiment but also had a larger effect on the service industry, ranging from restaurants to lodging and even logistics.
Studies by Statistics Korea showed that consumer sentiment during the MERS outbreak dropped more sharply than during the month after the ferry sinking.
Setting a rating of 100 for the two months prior to the incidents, consumer sentiment fell to 95.2 in the case of MERS, whereas for Sewol, it was 96.3 in the month following the incident. A month later, MERS continued to have a bigger impact on consumers as it remained similar, whereas the impact on spending after the ferry tragedy improved to 99.1.
The month that MERS occurred, the service industry’s production index retreated at a faster pace of 92.5, whereas the impact of the Sewol incident was rated at 99.1.
“When comparing the two indices, it is clear that in the short term, the service industry worsened much faster and consumers tightened their spending more during MERS,” said a BOK official.
The BOK noted that as MERS was an infectious disease, it caused Korean consumers to refrain from outside activities.
Studies showed that there was a significant drop in the number of visitors to amusement parks, as well as a drop in vehicles traveling to other regions during the MERS outbreak.
The report showed that in May when the news of MERS broke, the number of visitors to amusement parks grew 25 percent year on year.
But the following month, when the situation reached its peak, the number of visitors plummeted 48.2 percent. The number of foreign tourists also tumbled 41 percent to 750,000 in June, but saw a steeper drop in July when it fell 53.5 percent.
The situation slightly improved in August when the number of tourists decreased 25 percent compared to the same month a year ago.
BY LEE HO-JEONG [firstname.lastname@example.org]