The South Korean retail industry may suffer larger losses from the coronavirus than during the Middle East Respiratory Syndrome (Mers) in 2015, analysts say, citing the new virus’ high rate of infection and tightened quarantine efforts.
“The new coronavirus may have a lower fatality rate compared with Mers, yet it has a higher spreading rate and entails stronger quarantine regulations,” Hana Financial Investment Co analyst Park Jong-dae said.
Park said that the new coronavirus may cause up to a 70-per-cent fall in both Chinese inbound travellers and duty-free companies’ sales.
The retail sector is bearing the brunt of the coronavirus scare, brokerages said, even more so than the Mers and severe acute respiratory syndrome (Sars) outbreaks.
In 2003, the outbreak of the Sars cut South Korea’s annual economic growth by 0.1 percentage point. The 2015 Mers outbreak slashed South Korea’s annual economic growth by 0.3 percentage point.
In the first week of February, the duty-free companies’ combined sales dipped some 30 per cent year on year and 50 per cent quarter on quarter – a stark contrast to the previous month’s 25-per-cent hike, according to data from the Korea Duty Free Shops Association.
The number of Chinese visitors fell 81 per cent month on month to 3571 as of Saturday, compared with a 60-per-cent drop in the three-month period of the Mers outbreak in 2015, Korea Tourism Institute data showed.
Lotte Department Store temporarily closed its main branch in central Seoul until Sunday as part of quarantine efforts after a customer turned out to have contracted the coronavirus.
Hyundai Department Store suspended its premium outlet in Songdo, about 40km west of Seoul, while South Korea’s largest hypermarket chain, Emart, suspended trading at its Mapo-Gongdeok branch.
South Korea has so far reported 27 cases of coronavirus infection. Among them, 24 patients were receiving treatment at local hospitals as of early Monday, with three virus-infected patients already discharged from hospitals.
- Original reporting by Yonhap, via Korea Bizwire.