ING slashes economic growth forecasts for Asia due to SARS

ING slashes economic growth forecasts for Asia due to SARS

Agence France Presse Hong Kong

ING Financial Markets on Monday cut its 2003 economic growth forecasts for a number of Asian economies, citing the outbreak of the Severe Acute Respiratory Syndrome (SARS) virus.

"SARS is a more serious threat to regional GDP (gross domestic product) growth than the U.S.-Iraq war," ING said in a note to its clients.

"The outbreak of SARS in February and its spread throughout the region is a major negative... Hong Kong, Malaysia and Thailand appear most exposed to damage from SARS given the importance of tourism to their economies," it said.

"Korea, the Philippines and Taiwan would be least affected."

The brokerage slashed its 2003 GDP growth forecast for Hong Kong to 1.5 percent from a previous estimate of 2.5 percent, while trimming its 2003 forecast for Malaysia to 4.0 percent from 5.0 percent and its estimate for growth in Thailand to 4.3 percent from 4.5 percent.

In addition, ING cut its growth forecast for Singapore to 2.0 percent from 3.5 percent.

"The revision for Singapore's GDP, though the economy is not most vulnerable to SARS under our base case, was prompted by a disappointing first quarter performance," it said.

It reduced its 2003 growth forecast for Indonesia to 3.7 percent from 4.0 percent and its forecast for Taiwan to 3.3 percent from 3.5 percent previously.

The brokerage also cut its 2003 GDP forecast for South Korea to 4.0 percent from 4.9 percent, although it said the revision is more due to weakening economic fundamentals than SARS.

ING said it is maintaining its 2003 GDP growth forecast of 7.5 percent for China "because we consider it was subject to upward revision before SARS".

China has been criticized internationally for its slow response to the SARS crisis, which has killed nearly 140 people worldwide and infected over 3,000.