US Federal Reserve Chairman Alan Greenspan said on Wednesday that the economic effects of the SARS outbreak have been relatively contained to hard-hit sectors in specific Asian countries.
During testimony on Capitol Hill, Greenspan described the economic impact of the flu-like illness as "more recent, more uncertain and more difficult to pin down" than the worldwide AIDS epidemic, now more than 20 years old.
Greenspan said SARS has had a major negative impact on air travel and all aspects of tourism in Southeast Asia: "Since a fairly significant part of Southeast Asia does rest on travel and tourism, it's beginning to have some effect, specifically in Hong Kong, to a lesser extent in Singapore and China."
"But it's pretty much contained in that area," he said.
Greenspan cited "very little evidence" of economic impact beyond the travel sectors in the affected part of Asia.
"There are one and a quarter billion people in China and even though the numbers on SARS are large, they are clearly just a negligible part of the total at this stage," he said. "But it is clearly having some modest effects."
The biggest risk to the US and other developed economies from SARS comes through so-called "just in time" business systems, which minimize the capital tied up in inventory by using computerized product management to calibrate supplies to demand, he said.
If SARS causes major absenteeism or other disruptions at production centers in Asia, the economic problem "could feed back into the United States through the just-in-time processes," he said.
"To date, there is just no evidence of that," he said. "Apparently, production is being maintained, and we see no backing up in any significant way of supply lines in the United States."