In its current form, the MERS virus will not likely prompt a pandemic. Though the South Korean outbreak is the second largest in the virus' history, it has followed certain patterns of previous MERS outbreaks that indicate a low threat to the general population. First, the virus can only be transmitted through close contact with infected patients, which often occurs in a hospital setting. In South Korea, MERS has remained contained within the country's healthcare systems; no sustained human-to-human transmission has been documented. Second, the virus poses the greatest risk to people who already suffer from underlying medical conditions. While there have been 10 deaths in the South Korean outbreak so far, many of the victims had medical conditions that had already weakened their immune systems. In addition, during previous MERS outbreaks, many of the cases presented as mild or even asymptomatic.
An Abundance of Caution
Though the threat of a MERS pandemic is low, South Korea and its neighbors are responding to the outbreak with caution. More than a decade has passed since the region experienced an epidemic of Severe Acute Respiratory Syndrome (SARS), but neither the people nor their governments have forgotten its consequences.
So far, the South Korean government has quarantined more than 2,000 people and closed more than 2,000 schools and universities. There are also numerous signs posted at Seoul's international airport warning of MERS in an effort to raise awareness of the virus. However, there is evidence that the reaction among the South Korean population and many tourists has been somewhat muted. A Stratfor source noted that during a recent visit to a major South Korean airport, a single employee manned the video system to check for elevated temperatures. According to anecdotal observations, instances of people wearing face masks have not risen much higher than levels normally seen to guard against pollution, and even then many people are only donning their face masks in heavily crowded areas, such as on buses or the subway.
Meanwhile, other governments in the region have adopted the caution of South Korea's leaders, if not exceeded it. Only one case of MERS has crossed South Korea's borders, but many Asian-Pacific countries including Japan, North Korea and Indonesia have increased individual screenings at airports or other border crossings. Chinese healthcare officials and facilities are on high alert for patients with undiagnosed respiratory illnesses. But Hong Kong, which was hit hard by the 2003 SARS epidemic, has had the most aggressive response to the MERS outbreak. It has stockpiled face masks and has issued the harshest travel restrictions, advising that all non-essential travel to South Korea be postponed or canceled. Taiwan has issued similar advisories even though the World Health Organization has not issued any travel warnings in response to the MERS outbreak.
Given the limited impact and reach of the disease, such travel bans are likely unnecessary. The abundance of caution regional governments are showing is simply an effort to eliminate the risk of a cross-border epidemic, however unlikely it may be. But even though these precautions may not have much of an impact on MERS' spread, they will likely harm South Korea's economy in the short term.
A Blow to South Korean Tourism
Tourism accounts for just over 2 percent of South Korea's economy. In April, the country saw roughly 20 percent year-on-year growth in tourism from China, Taiwan and Hong Kong, contributing some 56 percent of tourists arriving in South Korea. Chinese tourists alone spent $164 billion in South Korea in 2014. But the outbreak of MERS has stalled this promising trend. While the official statistics for May have not yet been released, an estimated 85 percent of Chinese, Taiwanese and Hong Kong travelers canceled their trips to South Korea, and tours of the Demilitarized Zone were called off. Goldman Sachs Group Inc. also attributed 0.2 percent of its downgraded forecast of South Korea's GDP growth to the MERS epidemic.
Given the slowdown in South Korean tourism that has already begun, we can expect to see a temporary downturn in other parts of the economy as well, especially the retail sector. But again, any harm the MERS outbreak causes to the South Korean economy will be short-lived. With its short incubation period and low likelihood of sparking a pandemic, the disease — and the panic it has created — will likely die down in a matter of months. In the aftermath of the 2003 SARS outbreak, the Chinese and Taiwanese tourism sectors rebounded quickly; the same will likely be true for South Korean tourism as the MERS scare recedes. Once the spread of the virus halts, we can expect a return to South Korea's previous growth trends, a recovery process that will likely begin by the end of the year.