MERS outbreak slumps South Korea’s economy

Seoul 

South Korea's economy slowed in the second quarter, with consumer spending stifled by an outbreak of Middle East Respiratory Syndrome (MERS) and exports failing to lift themselves out of a lengthening slump. 

Asia's fourth largest economy grew 0.3 per cent in the April-June period, down from 0.8 percent in the first quarter, the Bank of Korea said Thursday.

The central bank put year-on-year growth at 2.2 per cent -- the slowest pace for more than two years and below analyst forecasts. 

Thirty-six people died in the MERS outbreak that infected 186 people following the first diagnosis on May 20. 

Local businesses including shopping malls, restaurants and cinemas reported a sharp drop in sales as people shunned public venues with large crowds.

The government recently announced a 22 trillion won ($19.8 billion) stimulus package, much of which was aimed at supporting businesses hurt by the MERS crisis.

Earlier this month, the Bank of Korea cut its 2015 economic growth forecast for the third time this year, from 3.1 percent growth to 2.8 percent. 

Citing sluggish exports and weak domestic consumption -- exacerbated by the MERS outbreak -- the bank has kept its benchmark interest rate unchanged at a record low of 1.5 per cent.