The outbreak of severe acute respiratory syndrome (SARS) may do more harm to the domestic economy than than a drawn-out war in Iraq, economists and government officials said yesterday.
"The economic growth rate in Asian countries may on average see a 0.5 percent drop every quarter if the disease continues to pose a threat," said Andy Xie (
In a worst-case scenario, a lengthy outbreak of SARS could further delay Taiwan's economic recovery until late this year or early next year, said Wu Chung-shu (吳中書), a research fellow at the Institute of Economics at Academia Sinica.
Xie said that an expected oil-price hike because of the war will pose less of a threat than expected to the region's economies.
Oil prices have dropped from over US$34 per barrel in the pre-war period to present US$27 per barrel. Whereas, the disease, which remains untreatable, has hit traveling-related industries hard, which account for 10 percent of GDP in Asia, he said.
The nation's tourism sector has been negatively impacted because of a decline in spending by foreign visitors, which accounted for 1.4 percent of the nation's GDP, Xie said, adding "few foreigners dare to travel to the region and few locals, even with their surgical masks on, dare to dine out in restaurants."
Beijing's mismanagement of the disease may add to the public's worries economically and psychologically, and further diminish the cross-strait trade volume, Xie said.
David Hong (
"China [investment] fever may be slightly brought down," Hong said.
Ho Mei-yue (何美玥), vice chairperson of the Council for Economic Planning and Development, shared a similar view with Xie, but said that the nation's GDP may only suffer a drop of between 0.03 percent to 0.1 percent even if the malady drags for a period of three to six months.
She said that the illness only constitutes "a temporary shock" to the economy and that the shipping industry would see less impact than the tourism sector.
The council forecast on Monday that the local tourism industry may suffer NT$8.5 billion in loss if SARS continues until the end of this year.
Some China-bound investments may also be postponed for a month or two, Ho said.
But Wu said that the combination of the protracted Iraqi war and worries about the disease's rapid spread may still trigger a long-term curb on private investment unless positive signs show up within the next two weeks.
Cheng Chen-mount (鄭貞茂), an economist at Citibank NA (花旗銀行), said that the disease's psychological impact on the public is far greater than its actual impact on the local economy.
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