Korea MERS posing major impact, downside growth risks

In qoq terms, Korea GDP growth rose to 0.8% sa, helped by stronger fixed investment in construction, centered around residential properties. 
"Growth forecast at 3.0% for 2015", says Bank of America.

However, growing downside risks to growth are seen, mainly due to weak exports and the recent outbreak of Middle East Respiratory Syndrome (MERS). If the MERS situation worsens, Korea's 2Q and 3Q GDP would slump by 100-300bp, mainly due to deterioration in the consumption and service industries.

The MERS outbreak will likely weigh further on consumer sentiment, just as it is showing some recovery. Consumption might decline temporarily and recover at a very gradual pace. On the positive side, there are early signs of a solid investment rebound in sync with the government's pro-investment reform plans, added Bank of America.