DISTANCING MEASURES AND ITS AFFECT ON ECONOMY

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If social distancing measures are raised to Level 3, the economic impact will likely be enormous. More severe measures cannot be ruled out if the situation aggravates further. Here's a look at how strict social distancing measures could affect the country's economic growth.

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No gatherings of more than two people, except family members. Restaurants closed except for take-out service. Working at a distance of less than 1.5 meters prohibited. These lockdown measures were enforced by the German government between March 22 and April 19, when COVID-19 was spreading rapidly in the country. The repercussions were quite serious. In March and April, retail sales in Germany fell more than 5 percent on-month, resulting in a GDP drop of more than 10 percent in the second quarter. If Korea elevates its social distancing measures to Level 3, gatherings of more than ten people will be banned, various facilities will be closed, and even government agencies will have to reduce their workforce in half. Private businesses, which are seeing more employees working from home due to the fresh wave of coronavirus cases, will also be advised to minimize their workforce. How severe will it be? According to the Oxford COVID-19 Government Response Tracker, Korea's response was the highest in April, at 82 points, when the outbreak was at its peak. But even then, the nation's social distancing measures were not raised to the highest level, meaning this time they could be much more stringent.

[Soundbite] KIM WI-DAE(KOREA CENTER FOR INTERNATIONAL FINANCE) : "The situation could be similar to that in Germany and France back in mid- and late-April, when economic lockdowns were enforced."

KB Securities predicts that if Level 3 social distancing measures are enforced in the Seoul metropolitan area for just two weeks, the country's annual economic growth might contract by an additional 0.2 to 0.4 percentage points. The economic shock is expected to be particularly severe on small businesses and the self-employed, as they will have to close down their businesses.