SOUTH-EAST ASIA: SARS Forces Governments to Discuss Economic Pain

By Marwaan Macan-Markar Reprint | | Print |

Marwaan Macan-Markar

BANGKOK, Apr 18 2003 (IPS) - The special summit to be held by South-east Asian leaders this month to deal with the economic consequences of the Severe Acute Respiratory Syndrome (SARS) amplifies the rising tide of panic over the deadly illness in the region.

This crisis meeting on Apr. 29 was called for by Singaporean Prime Minister Goh Chok Tong during a telephone conversation with Thai Prime Minister Thaksin Shinawatra this week.

The summit will provide leaders from the 10-member Association of South-east Asian Nations (ASEAN) to ”discuss experiences and formulate economic rescue measures,” Thai Public Health Minister Sudarat Keyuraphan was quoted in Friday’s ‘Bangkok Post’ newspaper.

The gravity of this meeting is evident, judging from the compelling issues that have forced ASEAN leaders into special summits in the past. In 1978, the leaders met this way after Vietnamese troops invaded Cambodia, stated the English-language ‘Nation’ newspaper on Friday.

ASEAN, South-east Asia’s main regional grouping, includes Brunei, Burma, Cambodia, Laos, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.

Of these countries, Singapore and Vietnam have been the worst hit by SARS, an atypical form of pneumonia. Since the disease gained global attention in early March, 162 people have been detected with SARS in Singapore, of which 13 people have dies and 85 have recovered.

In Vietnam, 63 cases have been detected, of which five people died and 46 have recovered.

By comparison, the infection rate in the rest of ASEAN is relatively low – Thailand has reported eight cases, Malaysia, five cases, and the Philippines, one case.

But beyond the health sphere, experts fear that SARS increasingly threatens to sap the economic health of ASEAN and undercut its competitive edges including as hubs for tourism and regional finance two sectors most affected by fears of travel and limits on physical mobility.

”Over the short and medium term, the sector most vulnerable to SARS are those related to consumer spending, lie retail sales, restaurant services, tourism and travel-related sectors such as hotel occupancy and transportation” says Pradumna Rana, director of the regional economic monitoring unit at the Manila-based Asian Development Bank (AsDB).

Likewise, foreign business people and expatriates are staying away from Hong Kong and Singapore. Media reports say many have in fact sent their families away from Hong Kong, if they have not left themselves.

”The contagious nature of SARS discourages international travel and, thereby, affects travel-related spending,” he adds.

Three countries feeling the pinch most are Vietnam, Singapore and Thailand. During a recent regional tourism meeting held in the Vietnamese capital Hanoi, authorities admitted that SARS had led to almost half the expected number of tourists cancelling their bookings.

Singapore Airlines, the city-state’s national carrier, is reporting that it has cut 199 flights per week due to the drop in air travel over the last weeks. Authorities also say that tourist arrivals have dropped to 50 percent in April when compared with the numbers during this period last year.

In Thailand, hotel authorities have confirmed to the media that occupancy rates in hotels had dropped to between 30 to 40 percent.

The travel and tourism sector is a central pillar of the ASEAN economies, which, according to the World Bank, accounts for four to five percent of the region’s Gross Domestic Product (GDP). Thailand alone gets 10 million tourists a year.

Little wonder why the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), among other international institutions, was compelled to cut its estimates of projected growth in the region due to the impact of SARS and the war in Iraq.

All the major engines of growth in the region will feel the pinch, ESCAP officials stated Thursday after the launch of the ‘Economic and Social Survey of Asia and the Pacific 2003’.

Singapore’s estimated GDP growth for 2003 will drop to 3 percent from the previously forecast 4.2 percent for this year, while Malaysia’s growth will drop to 4.5 percent from the forecast 6.3 percent, according to ESCAP.

Thailand, on the other hand, will see its GDP growth drop to 4.2 percent from the forecast 4.5 percent for 2003 and Vietnam’s growth will drop to 7 percent from the forecast 7.5 percent.

”We had to revise our projections for 2003,” Kim Hak-su, ESCAP’s executive secretary, said at the launch of the annual report of the economic performance across Asia and the Pacific. ”We need to watch out how SARS can develop.”

Still for all, the ESCAP report revealed the Asia-Pacific region had performed well last year against the global economic averages and the potential of repeating that achievement this year was plausible.

In 2002, the ESCAP region countries collectively registered a growth of 5.1 percent as opposed to the world average of 1.7 percent. The U.S. economy, by contrast, had only grown by 2.4 percent in the same year.

And in 2003, after making the cuts for the impact of SARS and the conflict in Iraq, the ESCAP countries were expected to achieve a 5 percent growth rate as opposed to the world average of 2.3 percent. The U.S. economy, according to ESCAP, was expected to grow by 2.2 percent this year.

China’s economy played a lead role to achieve these salutary numbers. In 2002, the Chinese economy registered a 7.9 percent growth rate and this year, even after accounting for SARS, it is expected to achieve 7.5 percent growth, according to ESCAP.

Consequently, economic experts say it is premature to make parallels between the economic shocks being felt in South-east Asia due to SARS and the economic flu that swept through the region in 1997.

”The 1997 financial crisis was a very serious crisis – a currency crisis, led to a banking crisis and eventually to a full economic and social crisis,” says the AsDB’s Rana, adding that to draw comparison is to ”exaggerate” the reality.

”The threat of SARS to the economy will only become very serious if it becomes uncontrollable and starts affecting the supply side of the economy,” he adds. ”At this time, I don’t think such an event will occur.”