South Korea may be in danger of a recession in the wake of the deadly coronavirus because of its China-dependent economy, President Moon Jae-in warned. Moon called the virus “more serious than [they] thought,” and said action would need to be taken, the Financial Times reported.
In South Korea, the biggest exporters — such as Hyundai — have already faced troubles with delayed shipments of parts from China.
China buys about one quarter of South Korea’s exports. With the chaos surrounding the coronavirus epidemic, though, South Korea will now issue a Won420bn emergency plan to aid struggling companies, including airlines, shipping firms, retailers and travel agencies. Won420bn is equivalent to around $356 million.
However, it won’t be enough to reverse things completely. Chong Hoon Park, head of research at Standard Chartered in Seoul, said the latest news around the coronavirus would “ensure” that the country’s gross domestic product growth wouldn’t hit the 2 percent mark from last year. He added that the economy was “losing momentum just when it was about to slowly recover,” and that the slowdown would eat into exports and tourism revenues.
Moon said all possible measures should be enacted to support the South Korean economy.
Singapore also unveiled a $6.4 billion stimulus package to try and stave off negative repercussions. The package includes a job support scheme, corporate income tax rebate money, and additional support for sectors like aviation and retail that the virus has hit the hardest. Such help packages mirror those in China, as financial institutions step up to the plate in the time of need.
Japan has stated that it is in danger of a recession because of a disruption in supply chains and exports due to the coronavirus, and because growth shrank by 6 percent at the end of 2019.
Meanwhile, companies like Apple have stated that they would likely see an economic slowdown this quarter due to faltering production rates.
The coronavirus has infected tens of thousands, and killed nearly 2,000 people in China.