The war in Iraq and the respiratory disease that began in China will slow economic growth in East Asian developing nations from a 5.4 percent rate forecast before the threats emerged, a UN report said.
"Prospects for 2003 were that gross domestic product growth would be sustained, perhaps even with some marginal improvement over 2002," Ambassador Murari Raj of Nepal said. "However, the war in Iraq and severe acute respiratory syndrome pose significant downside risks."
UN economists and academicians prepared the analysis of Asian nations, excluding the Middle East, in February. They forecast 5.4 percent growth this year, an increase from 5.1 percent last year, for all nations in the region except Australia, Japan and New Zealand. Those developed economies are expected to grow by 0.5 percent, up from a 0.3 percent decline last year.
Raj said yesterday that while private analysts forecast a decline in growth of as much as 1 percentage point in China, Hong Kong, Singapore and Thailand because of severe acute respiratory syndrome, or SARS, the UN isn't yet sure of the impact of the disease. It depends on whether SARS is contained by the end of the second quarter, he said.
"The main impact will be on tourism and travel, and thus on hotels, restaurants and retailing," he said. "If SARS becomes long lasting, its impact will extend beyond those sectors into actual production declines and job losses in sectors other than travel and hotels."
Singapore slashed its economic growth forecast in half and said it would spend US$130 million aiding hotels and airlines. It became the first government to cushion businesses from the impact of the virus, which has infected more than 3,000 people worldwide and killed at least 164.
Hong Kong's and China's debt ratings may be affected should the SARS outbreak last longer than six months, Moody's Investors Service said. Hong Kong and China have debt ratings of A3, three levels above the lowest investment grade, from Moody's.
The report said China's economy will grow by 7.7 percent this year, India's by 6 percent, Pakistan's by 4.5 percent and Singapore's by 4.6 percent.
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