South Korea on red alert as Covid-19 cases soar in southern cities

South Korea has been put on “red alert” after a rapid rise in new cases, mainly so far in Daegu city and Cheongdo county. Most cases have either been traced back to a Christian religious group or to a hospital. By Monday the number had reached more than 750, putting the number of confirmed cases at the same level as had been detected in China precisely a month previously. Worryingly, the trajectory of increase was also roughly the same as was experienced in China from January 20th to January 23rd.

Daegu city and Cheongdo county were designated “special care zones” on Friday February 21st.

Meanwhile on Saturday China confirmed 648 new infections. Although higher than the day before, only 18 were outside of Hubei province. This was the lowest number outside of the epicentre since authorities started publishing data a month ago. The number of new infections continued to decline slightly over Sunday and Monday.

On the economic side, China’s central bank looks set to take further steps to support the Chinese economy. This would include releasing more liquidity and lowering funding costs for companies, a People’s Bank of China (PBOC) vice-governor Liu Guoqiang told state media at the weekend.

“China’s monetary policy space is still very sufficient, and the toolbox is also sufficient. We are confident and able to offset the impact of the epidemic,” Liu told Financial News.

The PBOC also will release more liquidity to some banks due to annual changes in assessments of targeted reserve requirement ratio (RRR) cuts. That would free up funds to lend to smaller firms, Liu said.

Liu emphasized that PBOC would not resort to “flood-like” stimuli.

China has urged banks to give cheap loans and payment relief to companies which have been hardest hit by the outbreak.

China’s economic growth was expected to slow dramatically in Q1 – possibly halving to an annualized 3% for Q1. That would be the weakest pace since Chinese industrialization really got going in the 1990s.