The chief of South Korea's central bank on Wednesday said the adverse impact of Middle East Respiratory Syndrome on domestic demand appears to have fizzled out one month after its first outbreak in Asia's fourth-largest economy.

"Some weekly consumption-related indicators showed that while figures have slipped on an on-year basis, the extent of the fall has declined from the first and second week of the outbreak, which is why we are hoping the impact is weakening," Bank of Korea Gov. Lee Ju-yeol said ahead of a meeting with local economists.

Lee cited the acute respiratory illness as one of the biggest economic risks facing the Korean economy, in addition to ongoing debt talks for Greece and the U.S. Federal Reserve's expected rate hike.

Participants at the meeting echoed the view, voicing concern over the economic impact of the MERS outbreak and forecasting its repercussions to linger for "a considerable time" despite a slowdown in new infections, according to a BOK statement released after the meeting.

The central bank chief, meanwhile, voiced optimism over the Greek debt talks and said the impact of the U.S. rate hike is likely to be delivered gradually, posing less risk to the Korean economy.

 Lee still said the BOK will continue to monitor the global financial market to gauge risks stemming from the Fed move and stressed the need to gear up for possible worsening of external risks, saying the Korean economy should "hope for the best but prepare for the worst."

The Wednesday remarks come as South Korea continues to tackle the MERS outbreak that has killed 27 people and pummeled domestic demand that was considered to be on the brink of recovery.

The potentially fatal disease has hit the retail and tourism industry specifically hard as consumers avoided visits to public venues and foreigners canceled their travel plans on fears of contracting the illness.

Data by the state-run tourism agency showed that more than

120,000 foreigners have canceled their visits since the MERS outbreak, while separate industry data showed that duty-free shops and department stores reported double-digit falls in their sales.

As part of efforts to prop up sentiment, the BOK slashed the key policy rate to a record low of 1.5 percent on June 11. Seoul has also unveiled measures to support struggling sectors, such as drawing up funds and delaying tax audit schedules.

Nonetheless, economists forecast the unprecedented outbreak will further cut growth here. Nomura projected MERS to drag down growth by 0.3 percentage point, while the Korea Institute of Finance expected a 0.1 percentage point dip. (Yonhap)