South Korea on Thursday announced a $14 billion stimulus package to boost its troubled economy, hammered by the deadly MERS outbreak, which has dented consumer spending and business sentiment.
In announcing the 15 trillion won programme -- which follows a central bank interest rate cut to a record low this month -- the finance ministry also slashed its growth outlook for this year.
Finance Minister Choi Kyung-Hwan said the extra was crucial because a recovery in Asia's fourth largest economy hinged on the effectiveness of efforts to quickly contain Middle East Respiratory Syndrome.
As of Thursday the virus has killed 29 people and infected 151 since first confirmed on May 20, making it the worst outbreak outside Saudi Arabia.
"We can say that we have overcome the MERS crisis only if our economy rebounds," Choi said, warning that growth could come in below 3.0 percent without support from the extra spending.
The finance ministry slashed its growth forecast for this year to 3.1 percent from an earlier projection of 3.8 percent. It has also lowered its inflation outlook to 0.7 percent.
As part of the package provincial authorities will be encouraged to spend more on infrastructure projects, while it will also be used to help contain MERS, address the effects of a severe drought and create more jobs.
"We're trying to cope with shocks from non-economic issues by boosting fiscal spending sufficiently and keeping it expansionary," said Lee Chan Woo, a director general at the ministry.
"This supplementary budget is to offset the effect of the Middle East Respiratory Syndrome, the drought, and to help low-income earners."
The central Bank of Korea interest rates this month to a record low 1.5 percent as businesses including shops, restaurants and cinemas reported a slump in sales.
South Korea's exports fell 10.9 percent from a year earlier in May, shrinking for the fifth consecutive month.
On Thursday the health ministry reported two more deaths and one more new case.
The two fatalities included a 65-year-old man who contracted the virus at a hospital at the central city of Daejon. He was diagnosed on June 6.
The other was a 70-year-old woman who was a relative of another infected patient. She was diagnosed on June 22.