SARS strikes hardest Asian economics to shoulder
SARS strikes hardest Asian economics to shoulder
Karl Malakunas, Agence France-Presse, Singapore
Asia's economies struggled through the rise of regional terrorism and the war on Iraq but Severe Acute Respiratory Syndrome (SARS) proved to be one crisis too many as it wiped out billions of dollars of business across the region.
The tourism industry was the highest profile economic casualty, falling by more than 70 percent in Singapore and Hong Kong, while domestic demand crashed in every country touched by SARS as frightened people avoided public places.
Now that the authorities have declared the SARS crisis is nearing its end, official and private sector forecasts are that Asia's wounded economic tigers can once again scratch and claw their way out of the latest crisis.
Economic research house IDEAglobal has assessed the impact of SARS now that the epidemic is considered under control and believes an average 0.9 percentage points will be wiped off growth in Asia's nine major regional economies this year, excluding Japan.
On the crucial provisos that there is not another outbreak and the U.S. economy finally kicks into gear, IDEAglobal predicts the region's economies will pick up close to pre-SARS levels in the final three months of this year.
"We have made our assumptions on a very bad three months (during the crisis), three more months of poor demand and tourist arrivals before things come back," IDEAglobal's Asian deputy head of research Nizam Idris told AFP.
According to IDEAglobal, whose assessments largely tally with other analyst and official forecasts, Singapore and Hong Kong will suffer the most this year from SARS, with 1.5 percentage points shaved off their annual growth forecasts.
Although Malaysia and Thailand avoided any big SARS outbreaks, their reliance on tourism also hurt them, slashing their annual growth rates by 0.5 and one percentage point respectively.
Conversely, while more than 80 people have died in Taiwan from SARS, Nizam said their relative lack of reliance on tourism had sheltered it from the economic woes suffered in other parts of Asia.
IDEAglobal says SARS will take 0.5 percentage points off Taiwan's economic growth this year, although the Taipei government is more pessimistic, forecasting 2.89 percent annual growth, down from a 3.68 percent prediction made in February.
While Taiwan is less concerned with tourism, the government predicts export orders in the second quarter will fall 2.9 percent, costing US$1.09 billion.
Vietnam, which was one of the first nations hit by SARS but also the first to contain it, recorded a 54 percent drop in tourist numbers in May.
However, official figures there showed GDP growth in the first five months of this year was still around seven percent thanks to growth in exports and industrial output.
In China, where more than 340 people have died, IDEAglobal predicts the economy will grow 7.5 percent, also 0.5 percentage points less than pre-SARS forecasts, with the sheer size of the nation and its economy offering some buffer.
China recorded a trade surplus of $2.38 billion in the first five months of this year, with total foreign trade up 39.6 percent year-on-year to $309 billion.
Across the nine economies excluding Japan, IDEAglobal's assessment is that the region's growth rate will be 3.7 percent this year, compared with a forecast of 4.6 percent before the crisis.
Similarly, the Economist Intelligence Unit believes that over the next four years, Asian economies outside Japan will grow an average 5.6 percent, with SARS likely to have minimal long-term impact.
Nizam agreed with other analyses that the epidemic may have cost Asian economies as much as $30 billion, although he said it was impossible to give an exact figure because of the difficulty in assessing the impact of SARS on domestic consumption.
"Hong Kong has a $9.9 billion (annual) tourism industry ... if you take away a quarter of that for a halving of the market in quarters two and three, that's (a loss of) $2.5 billion already," he said.
"In Singapore there is a five billion dollar market so they have lost 1.25 billion.
"If you work along those lines, you can come up with a line of $20 to $30 billion."
Nizam said the impact of SARS on Asia's economies was magnified because it followed the Sept. 11, 2001, terrorist attacks on the United States, last year's October bomb blasts in Bali, Indonesia, and this year's U.S.-led war on Iraq.
"Because the problems have come one after another, the impacts on consumer confidence and the economy in general were greater. People were losing jobs before SARS," he said.