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Economic indexes for Feb. to plunge amid coronavirus outbreak

Kim Yong-beom, vice minister of economy and finance. (Yonhap)
Kim Yong-beom, vice minister of economy and finance. (Yonhap)

South Korea’s economic indexes for February could plunge drastically, taking the full impact of the coronavirus outbreak, the government said Friday.

“The fast-spreading COVID-19 is increasingly weighing on consumer sentiment and economic activities,” said Kim Yong-beom, first vice minister of economy and finance, during a macroeconomy-finance policy meeting at the Korea Federation of Banks in central Seoul.

The meeting was attended by officials from the Financial Services Commission, Financial Supervisory Service, Bank of Korea and Korea Center for International Finance.

“As COVID-19 started to spread here in end-January, industrial output indexes for January were not very affected,” the senior fiscal policymaker said.

“But as the fallout started to take shape in February, key economic indexes such as production and consumption could face increased volatility (this month).”

Data from Statistics Korea showed that retail sales in January contracted 3.1 percent on-month, marking the largest drop since February 2011, when hand, foot and mouth disease and a record-breaking cold wave hit the nation.

Industrial production saw a 0.1 percentage point rise on-month in January, but the service industries, the first to be affected by the coronavirus outbreak, started to decline. The travel business logged a 16.6 percent loss on-month amid the decreased number of inbound Chinese visitors.

Addressing the latest volatility observed in the financial market, the vice minister said excessive anxiety was unnecessary, considering the country’s fiscal and monetary policy space, as well as its top-level disease control capacities.

“The government will mobilize all available resources including reserve funds and alter fund operation plans to overcome the current situation,” he added.

The fiscal official also reiterated vows to firmly crack down on those who disturb the market by monopolizing face masks amid the prolonged supply-demand imbalance.

By Bae Hyun-jung (