For some sectors, the SARS epidemic has boosted business butthe economic winners are few and far between, write Jonathan Watts, in Tokyo, and Heather Stewart.

It is with a guilty sigh that Yoshi Izumi admits his firm is doing rather well out of the virus that is terrifying millions of people in Asia and threatening the economies of several nations in the region.

His company, Hakujuji, is in the face mask business, which is worth 10 billion yen (€76 million) a year in Japan.

But even in a country where it is considered socially commendable to go to work with a strip of white gauze across the face, spring is usually a lean season between the two peaks of demand: the influenza-ridden winter and the pollen-filled summer.

This month, however, the company's masks are flying off the shelves 10-times faster than last year - thanks to the outbreak of SARS, which has already claimed the lives of more than 250 people and infected thousands of others.

Although the disease originated in China, consumers in Japan and other Asian nations are taking no chances amid reports that SARS may be airborne.

"People are buying five or six masks at a time. Most are families travelling overseas, others work in airports and some have relatives in China, where good masks are harder to get hold of," said Mr Izumi.

Tourists to Japan used to laugh at the sight of people wearing face masks on the train or in the streets, but this Japanese custom - which took off during a flu epidemic in 1919 - is increasingly being adopted as a prudent measure elsewhere as fears of SARS grow around the world.

In the US, where more than 150 possible cases have been reported, Alpha Pro Tech says the value of orders for its masks rose by $1.5 million (€1.36 million) in a week.

In Australia, chemists on the Gold Coast have sold out and suppliers are unable to keep up with demand.

Profits are being made in other ways. In China, sales of traditional medicines are rising. In Korea, people are eating more kimchi pickled cabbage - the spicy traditional dish has been given the credit for the relatively low number of cases reported.

In Thailand, home delivery pizza services and shopping websites are getting more business as people become reluctant to mingle with crowds.

But the economic winners are few and far between.

The UN last week revised its growth forecast for Asia from 5.4 per cent down to 5 per cent, partly because of the fall in tourism caused by SARS.

Morgan Stanley estimates the virus will shave more than $15 billion off the output of Asia's economies, and the World Health Organisation warns the global cost could rise to $30 billion.

The most immediate economic impact is being felt among the airlines that would normally be carrying people to and from China, Hong Kong and Singapore.

With television pictures showing local people hiding behind masks and health workers clothed from head to foot in germ-proof gear, potential travellers have been staying at home.

Hong Kong carrier Cathay Pacific has already been forced to cut more than 40 per cent of its flights and to concede it is "haemorrhaging" $3 million a day while the outbreak persists. The price of the airline's shares has dropped by almost a fifth since the end of February.

Hotels are suffering too, with occupancy rates in five-star Hong Kong venues down to single figures last week and staff being encouraged to take annual leave while rooms are empty.

In Singapore, where SARS has killed 17 people, visitor arrivals in the first two weeks of April were more than 60 per cent lower than a year ago. Retail sales have also slumped.

As the government of Singapore has already realised, such a sharp drop in activity will have a severe effect on an economy that is heavily dependent on its service sector.

Last Thursday, it slashed its growth forecasts for 2003 to 0.5-2.5 per cent from the 2-5 per cent it was expecting and announced a $130 million package of rescue measures for the hardest hit industries.

Other governments in the region seem likely to follow suit and analysts are already scratching out their predictions for the Chinese and Hong Kong economies and starting again.

Thailand admitted growth could be one percentage point slower because of the outbreak.

Malaysia said it was looking at measures to help SARS-hit firms.

In the tourist resort of Phuket, hotels are closing floors of rooms amid a 30 per cent fall in demand.

The prime minister of Singapore, Mr Goh Chok Tong, estimates the disease could knock 1 per cent off the island's GDP - worth $875 million - this year.

In Vietnam, where 68 cases have been identified, restaurants are asking staff to take early holidays because customers are so reluctant to eat out.

Nobody knows the impact in China but there have been cuts in inbound tourism, cancellations of events such as a World Economic Forum summit, due earlier this month, and an incalculable loss of trust in the government, which has botched a cover-up.

Whether the outbreak has deeper ramifications will depend on how quickly it can be brought under control.

"It's having a negative impact but people need to put it in perspective," said Mr Gerard Lyons, of Standard Chartered Bank.

"In the short term it dents sentiment and it dents discretionary spending, but if SARS is contained and sentiment recovers, the impact is likely to be V-shaped."

In that upbeat case, consumers and tourists start spending again, growth dips sharply then recovers strongly. The worst case economic scenario would follow the worst case health scenario - SARS spreads beyond south-east Asia.

Former Bank of England economist Mr Danny Gabay believes the infection could knock up to 1.6 per cent off global GDP this year if it spreads further and at the same rate at which it has in Asia.

Given that the IMF has pencilled in growth of just 3.2 per cent, that would tip the global economy dangerously back towards recession.

Reports last week that scientists have identified the disease - and that it may not be airborne - have raised hopes that an end to the crisis may be in sight. Even Mr Izumi of mask-maker Hakujuji says that would be good news.

"There is no doubt that SARS is a great business opportunity for us. But we hope that a cure is found soon. The disease is very worrying, and is ruining the lives even of many people who are not infected."