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MERS outbreak forces S Korea to cut key interest rate

Update: June, 11/2015 - 13:17

SEOUL — South Korea's outbreak of the potentially deadly MERS virus on Thursday forced the central bank to cut its key interest rate to ward off greater economic damage, as retailers report a slump in business.

And in what has become the largest outbreak of Middle East Respiratory Syndrome (MERS) outside Saudi Arabia, Seoul reported 14 new cases, including the first infection of a pregnant woman.

The new diagnoses brought to 122 the total number of confirmed cases in South Korea, the health ministry said. The number of fatalities remained at nine, with no new deaths reported in the past 24 hours.

Bank of Korea governor Lee Ju-yeol said slowing exports and threats to business from MERS were central to the decision to cut its benchmark rate by a quarter percentage point, to a record low of 1.5 per cent.

It was the first cut since March, when the central bank made a surprise cut of 25 basis points.

"It's been seen that this MERS crisis is having a negative impact on consumer spending," the BoK chief told reporters.

"The full impact of the outbreak still remains uncertain but we thought it was desirable to act pre-emptively to curb its negative impact on... the economy," Lee said.

In a statement, the BoK added: "In particular, we are concerned that economic and consumer sentiment, which had been improving, will worsen rapidly because of the MERS crisis."

South Korean businesses including shopping malls, restaurants and cinemas have reported a sharp drop in sales as people shun public venues with large crowds.

More than 54,000 foreign travellers have also cancelled planned trips to the country so far this month, according to the Korea Tourism Board.

Hong Kong has issued a "red" alert warning against non-essential travel to South Korea for health reasons. Seoul says World Health Organisation guidelines do not warrant such action.

Residents of Hong Kong are particularly sensitive after an outbreak of Severe Acute Respiratory Syndrome (SARS) killed 299 people in the city in 2003 and sparked global panic.

The MERS virus is considered a deadlier but less infectious cousin of SARS.

On Wednesday, the area around a health clinic inside a metro station in Hong Kong was cordoned off and officials donned protective gear after a woman returning from South Korea showed flu-like symptoms.

Surgical masks reportedly sold out in shops around the station, but Hong Kong officials confirmed on Thursday that the woman had tested negative for MERS. —AFP


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