Nation and World News

top news | u.s. | world | business | sports | health | tech | arts | search AP |
Jun 25, 2:32 AM EDT

South Korea cuts growth forecast as MERS saps spending


AP Photo
AP Photo/Ahn Young-joon

Buy AP Photo Reprints
Multimedia
Swift negotiations free U.S. journalists
Timeline of U.S.-North Korea relations
Timeline of North Korea's nuclear and missile programs
Depth of Field: North Korea
A look at Kim Jong Il
Truth emerges about Kim Soo-im
Commission: U.S. military killed Korean refugees
South Koreans Protest U.S. Beef Accord
S. Korea Women Keep Diving Tradition Alive
Bittersweet Homecoming: Koreans Return Home After 68 Years in Russia
Latest News
AP Exclusive: North Korean farmers face dry fields, drought

Explosion at chemical plant in South Korea kills 6 workers

Bus falls off bridge, killing 10 South Koreans

Blacklist warnings spread on websites in North Korea

With great fanfare, Pyongyang opens new airport terminal

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
New Puerto Rico agencies to buy TRANs amid economic crisis

Job market's new normal: Smaller workforce, sluggish pay

Egypt passes new budget for fiscal year 2015-2016

US unemployment falls to 7-year low, but wages are flat

Job growth expands in professional services and health care

Unemployment rate for black Americans at 7-year low

Spain raises 2015 economy growth forecast to 3.3 percent

California slips back to No. 8 economy in world

Argentina recalls its financial crisis, advises Greece

US manufacturing growth improves in June; hiring jumps

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

SEOUL, South Korea (AP) -- South Korea's finance ministry said Thursday that economic growth will slow this year as the outbreak of Middle East respiratory syndrome saps spending and tourism.

The ministry cut its forecast for South Korea's growth to 3.1 percent from 3.8 percent. Asia's fourth-largest economy grew 3.3 percent last year.

The outbreak that began last month is having a bigger effect on South Korea's economy than a deadly ferry disaster last year that plunged the country into mourning.

MERS has killed 29 people in South Korea and thousands are quarantined. People are avoiding busy public spaces. Overseas tourists, Chinese especially, are staying away.

The ministry said the MERS outbreak has derailed a recovery in consumption in particular. Revenues at department stores plunged 30 percent during the first two weeks of June and more than 120,000 visitors cancelled trips to Korea.

"Even after the MERS outbreak calms down, there could be a negative impact on the entire economy," Finance Minister Choi Kyung-hwan said in a televised news conference. "We can't say the MERS situation has completely come to an end unless the economy revives."

The ministry said it is planning $13.5 billion of economic stimulus to ensure that growth doesn't fall below 3 percent. The stimulus will target businesses that were hit by the MERS outbreak as well as a recent drought.

South Korea's central bank earlier this month cut its key interest rate to a record low of 1.5 percent.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.