The impact of severe acute respiratory syndrome (SARS) on Taiwan's economy will be limited, economists said yesterday at an international symposium at the Taipei International Convention Center.
"The impact of the virus will be very sharp, but equally it will be very short," JP Morgan Co economist Ben Simpfendorfer said yesterday at the 2003 International Symposium on SARS Outbreaks.
The negative impacts of SARS on Asian economies are a result of uncertainty, Simpfendorfer said, pointing out that only 81 people have died from the pneumonia-like illness worldwide. This compares to around 3,000 deaths from regular pneumonia in 2000, a statistic that had no effect on the world economy. "Uncertainty is bad for business," he said.
JP Morgan cut its forecast for Taiwan's economic growth from 3.5 to 3.2 percent this year due to the disease. Other economists at the symposium, which was organized by the Department of Health and the Ministry of Foreign Affairs, have made similar cuts to the nation's growth figures for 2003.
"We think the impact on Taiwan will be at most 0.3 percent [cut] as a result of SARS," said Cheng Cheng-mount (鄭貞茂), vice president of Citibank NA (花旗銀行), cutting his bank's estimate for the nation's GDP growth to 3.4 percent for 2003.
Economists attending yesterday's event warned that the disease could continue to spread. Excluding China's "unreliable" statistics, Cheng pointed out that the number of SARS cases is increasing by between 8 and 9 percent daily, having grown from 166 cases to 1,979 in the month between March 17 and April 18.
If the disease continues to spread for six months, the impact on Taiwan will be much more serious, the economists said.
"Assuming the SARS epidemic is prolonged for six months, the estimated 2003 GDP [growth] for Taiwan will fall by something in the range 1.56 to 1.86 percent, reduced from [our] forecast of 3.5 percent to between 1.74 and 1.44 percent," said Wu Rong-i (吳榮義), director of the Taiwan Institute of Economic Research. A six-month epidemic will cost the nation up to NT$186 billion, Wu said.
If the disease spreads among the workforce of southern China's factories, industrial output in the region's most powerful economy could be affected. The burgeoning Chinese middle class, whose consumer spending power is fueling imports from many economies in the region, may also choose to stay at home to avoid the disease, hurting countries like Taiwan which rely heavily on the Chinese market. Last year 29 percent of Taiwan's income came from exports to China, JP Morgan figures show.
Although most SARS cases are concentrated in Asia, its reach could be felt much further away, another economist said. "East Asia is the most dynamic region in the global economy, so SARS may add a further blow to the net performance of the global economy at large," said Hwa Erh-cheng (華而誠) an economist at venture capital company Global Strategic Investment Fund (全球策略投資管理).
Many international conferences and business trips have already been canceled as a result of the disease, reducing global trade, Hwa said. Businesses are responding by "shaving" or canceling investments. "SARS could prove to be much more damaging," Hwa said.
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