South Korea must take “emergency steps” and “all possible measures we can think of” to keep its China-dependent economy from crashing during the region’s coronavirus outbreak, president Moon Jae-in said last week.
“The current situation is more serious than we thought,” he noted.
The country has begun a $356-million emergency loan program to support retailers, airlines, shipping companies, and travel agencies hit by the sudden plunge in Chinese business.
China buys about 25 percent of South Korea’s exports, and many South Korean industries rely on parts from China. Hyundai Motor is suffering from lack of Chinese-made components.
Analysts see the virus’s impact as cutting South Korea’s economic growth rate to less than 2 percent this year.
The government issued a health “red alert” on 23 February after confirming more than 600 domestic cases of the illness.
TRENDPOST: South Korea, Asia’s fourth-largest economy, joins its neighbors in facing a viral economic crisis.
Japan, which also depends on trade with China, saw its economy shrink 6 percent in 2019 before the virus added another burden. The sudden loss of Chinese trade probably will tip Japan into recession, analysts say.
Singapore has begun subsidizing jobs in affected industries as well as offering corporate tax rebates and special props for aviation, travel, and tourism.
China’s central bank has cut its interest rates and implemented other measures to help its own businesses endure the crisis.
Overall, the harder the virus hits and the more money pumped into financial systems and economies to prop them up, the lower currencies will fall and the higher gold prices will rise.