S.Korea concerned about MERS' impact on economy, ready to act - fin min

By Christine Kim

SEOUL (Reuters) - South Korea is concerned over the impact on its economy from the outbreak of the deadly Middle East Respiratory Syndrome (MERS) and will take swift measures to counter any negative hit to growth, the finance minister said on Monday.

"I am concerned over the negative influence the recent MERS outbreak could have on the local economy, including private consumption and investment sentiment," Finance Minister Choi Kyung-hwan said in a prepared speech to be given at a luncheon.

"We will aggressively respond to mitigate the effect of MERS on the economy, including allocating necessary budgeting at the right time."

The ruling Saenuri Party head Kim Moo-sung also demanded the government take decisive action to support Asia's fourth-largest economy, which is already tottering amid a collapse in exports and slow consumption.

Their comments came just hours after the health ministry reported 23 new infections on Monday, bringing the total to 87 and making South Korea the second-most infected country in the world after Saudi Arabia. Six deaths have been reported.

The outbreak has prompted analysts to wager on another rate cut as early as at this week's Bank of Korea policy review, with some predicting more support from the government in the form of stimulus worth billions of dollars.

The finance minister, however, did not raise the possibility of a supplementary budget.

Choi said difficulties faced by local exporters are growing now due to a prolonged weakness of the yen and euro and reaffirmed that the government will announce measures to help ease difficulties for exporting industries soon.

Saenuri Party's Kim warned the outbreak could drive the economy into a bigger trough than the one triggered by a maritime disaster last year that killed hundreds of people and dented consumption.

"Over the weekend, tours and events were cancelled and places like markets, theatres and restaurants were empty," said Kim.

"If this continues, private consumption which was on the brink of rebounding could take a direct hit and we could face bigger difficulties than we experienced after the Sewol sinking."

Kim referred to policy steps taken during the severe acute respiratory syndrome (SARS) scare in 2003, when policymakers drew up a supplementary budget and cut interest rates twice.

(Editing by Shri Navaratnam)