The South Korean economy is facing greater downside risks in the wake of the Middle East Respiratory Syndrome outbreak and the Greek debt crisis, the finance ministry said Wednesday.

So far, the viral disease has claimed 34 lives since the first case was reported on May 20, and infected 186 people, sparking a health scare and dampening consumer spending.

The Greek debt problem, combined with China's equity rout, has thrown the local stock market into a tailspin, erasing some 50 trillion won of value in just the first two sessions of this week.

In its latest economic report called the Green Book, the ministry said the MERS outbreak and the Greek crisis have increased both external and domestic risk factors.

"Consumption, tourism and other service-sector activities have slowed because of the MERS scare," it said. "Uncertainty surrounding the Greek debt talks has also increased."

The ministry said the slow pace of the global economic recovery and its effect on South Korean exports have hurt industrial output and business investment in May, dealing a blow to the automobile, semiconductor and machinery sectors. Exports fell 10.9 percent in May and were down 1.8 percent on-year in June.

Investment in machinery, a key barometer of growth, contracted in May compared to the month before, although construction-related investment rebounded from minus territory.

The ministry said that low international oil prices are contributing to low inflation numbers. The country's consumer prices grew less than 1 percent from January to June fueling deflation worries.

On the plus side, the ministry said 379,000 jobs were created in May up from 216,000 the year before. Housing prices rose 0.4 percent on-month in June, along with modest gains in land prices.

Despite a drop in exports, the country's trade surplus soared to US$36.5 billion in the first five months of this year, from $14.5 billion the year before.

Retail sales for May stayed flat on-month after growing 1.4 percent in April, but gained 3.5 percent compared to the year prior. For the first quarter, private consumption rose 1.5 percent on-year and was up 0.6 percent from the fourth quarter of 2014.

For June, department store sales nosedived 10.7 percent on-year, with discount chain sales dropping 9.7 percent. The losses reflect the impact of MERS on consumption, the ministry said.

Sales of domestically produced passenger vehicles, on the other hand, jumped 9.4 percent on-year in June, with sales of gasoline and diesel fuel, another barometer of spending, falling 2.9 percent, according to the report. (Yonhap)