Think tank warns flu outbreak could slash Korea`s GDP by 5.6 percent

SEOUL, Nov. 1 (Yonhap) -- The rapid spread of the Influenza A (H1N1) virus could
significantly damage South Korea's travel, tourism and restaurant industries,
among others, causing the economy to contract by as much as 5.6 percent, a local
think tank warned Sunday.
If the impact of the new flu continues for a second straight quarter, the
country's supply-side gross domestic product, the broadest measure of economic
performance, could contract by 0.4 to 0.7 percent, due to a fall in the labor
supply caused by the pandemic, said a report released by the Korea Economic
Research Institute.
When factored into the impact of a flu outbreak on the demand side, damage to the
local economy could reach 5.6 percent, the report said, noting that the spread of
the new flu could reduce demand from the service sector.
The report added that the spread of the flu could cause a 5 percent decline in
the global economy if it begins to spread more rapidly over the short term.
"The export-dependent Korean economy could be hit harder as it is heavily
affected by any shrinkage in global demand," it said.
Since the first local outbreak in May, the new flu has forced the temporary
closure of local schools and delayed student and public gatherings. The death
toll from the flu in South Korea reached 35 as of Friday.
The Korean economy grew 2.9 percent in the third quarter from three months
earlier on improving consumer spending and robust exports. Compared with a year
earlier, the economy grew 0.6 percent, the first on-year expansion in one year.
sooyeon@yna.co.kr
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