hankyoreh

A person waits in line to get tested for COVID-19 at a temporary screening station in Seoul with a parasol in their hand on Tuesday. (Yonhap News)

Can we learn to live with COVID-19?

The fourth wave of the pandemic in South Korea has been fierce, yet the major economic indicators have been less impacted than in the past. It’s a reflection of how we’ve managed to carry on normal lives under disease control measures, in contrast with how economic actors suspended all activities in response to past waves.

As a result, some analysts have concluded that the shock to the economy from the virus spreading is diminishing and narrowing in scope over time. It’s a case where we may end up developing resilience in many areas, as the losses increasingly affect only a portion of people. In that sense, carefully crafted support will be necessary for people in particularly vulnerable job categories.

“Even with COVID-19, you still have to get your hair cut.”

It was the first salon visit in six months for Kim, a 61-year-old who spoke to the Hankyoreh in Seoul on Wednesday.

“I was so scared of the virus that I tried to avoid doing things outside as much as possible, but I had no idea the pandemic would go on for this long,” she said.

“You can’t just put your life on hold completely, so I’ve been going out more while making sure to wear my mask,” she said.

Early on in the pandemic, the salon’s sales plummeted by 90 percent. Four other salons in the same area have closed down over the past year.

Fortunately, this salon was able to recover its 2019 level of sales last month, thanks to regular customers who have been coming in since the start of the year. So far, visits have not declined much this month.

The South Korean economy has held up surprisingly well against the initial shock of the fourth wave. While it remains to be seen what impact the Level 4 social distancing regime imposed on the greater Seoul region on July 12 will have, credit card transactions between July 1 and 20 were actually up by 8.1 percent from the year before. In contrast, credit card transactions slipped by 3 percent over the month of January during the third wave.

A store in Seoul has put out a sign that says it’s closed for vacation due to Level 4 social distancing implemented in Seoul. (Yonhap News)

As of July 15, the Bank of Korea’s News Sentiment Index (NSI) was down to 121.07 amid the intensified disease control measures. By Monday, it had bounced all the way back to 133.23. During the first through third waves, it fell as low as 77.84.

An index representing economic sentiments reported in news articles shows that the NSI tends to show actual economic trends one to two months ahead of time.

The same day, the BOK announced a Composite Consumer Sentiment Index score of 103.2 for the month. While it was down for the first time in seven months, it was still above the standard at 100 points. Anything higher than the standard is interpreted as representing optimism.

The government is viewing these trends as indicating a learning effect. As people have adapted more and more to the pandemic, they have started buying durable goods, visiting department stores and supermarkets and going on trips again.

Signs of recovery are also evident in face-to-face services, which had suffered the heaviest blow. Based on its own internal classification of face-to-face services into different categories, the BOK found performance to be improving in areas such as hairdressing and education.

Meanwhile, as increased vaccination lowers the fatality rate, economic actors have felt far freer to pursue a “with COVID-19” economy. Many areas of the economy have shown increased resilience against the pandemic, and the scope of its impact has narrowed as a result.

This explains why the administration predicts the fourth wave will have a milder economic impact than previous ones.

In contrast, others have been bearing the brunt of the damage — and their pain appears likely only to intensify.

This polarization phenomenon involving areas particularly vulnerable to disease control measures — including restaurants, hospitality businesses, and entertainment and culture establishments — suggests a dire need for tailored government support.

The 36-year-old proprietor of a restaurant in Seoul, identified by their surname Jang, saw a 20 percent drop in sales during the third wave and expects them to fall by half amid the fourth.

“They’re all talking about how the blow to the overall economy may not be so bad for the fourth wave, but that’s not how it feels to small business operators like us,” Jang said, noting that sales “only dropped more when they lowered the limit [on private gatherings] from four to two people.”

Jang Min, a senior research fellow at the Korea Institute of Finance, said, “The COVID-19 fatality rate has been falling thanks to vaccines, not just in Korea but globally, and economic actors aren’t as skittish now as they were in the past.”

“As the scope of the impact narrows, it becomes important to adopt selective politics for the economy as a whole and for the segments that have been hit especially hard,” he said.

By Jun Seul-gi, staff reporter

Please direct comments or questions to [english@hani.co.kr]