East Asia could lose nearly $28 billion (€24.4 billion) in income and output if the region fails to control SARS by September, the Asian Development Bank (ADB) has warned.
The Manila-based bank said aggregate 2003 gross domestic product (GDP) growth in China, Hong Kong, South Korea and Taiwan could be reduced to 4.7 per cent, while growth in south-east Asia would drop to 2.5 per cent if the SARS epidemic continued between July and September.
Among the worst hit under such a scenario would be Hong Kong, with GDP expected to contract 1.4 per cent, the ADB said, compared with its original forecast of 2 per cent growth for the territory.
Before SARS struck the region, the bank forecast GDP growth in China and the other north-east Asian economies to be around 5.6 per cent and south-east Asia at 4 per cent.
"The reduction in GDP growth will translate into huge losses in income and output," ADB chief economist Mr Ifzal Ali warned.
China, Hong Kong, South Korea and Taiwan would chalk up losses totalling $20 billion if SARS ravaged their economies up to September, the ADB said.
Hong Kong and China are the worst affected by SARS, accounting for the bulk of the more than 500 deaths worldwide, while Taiwan has recently seen a sharp increase in the number of cases.
Losses in south-east Asia would amount to $7.7 billion if the killer respiratory disease extends into the third quarter, the ADB said.
The bank also said that, if SARS was not brought under control by the end of June, the damage to China and the other north-east Asian economies would be $8.8 billion, with the south-east Asian economies losing $3.2 billion.
The bank's forecast was based on a host of factors, including the magnitude and duration of the SARS epidemic, and the importance of the services sector in particular economies.
"The services sector is being emphasised because of various reasons: when SARS hits an economy, it causes uncertainty generated by fear and this has direct and indirect effects like a loss of consumer confidence, tourism suffers, investment drops and government revenue also drops," it said.
- (AFP)
