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Last Updated: Friday, 9 May, 2003, 09:05 GMT 10:05 UK
Sars 'could cost Asia $28bn'
Empty airport
Sars has reduced travel to a trickle

The Sars virus could cost Asia $28bn (17bn) in lost economic output, a major lender to the region has warned.

The Asian Development Bank (ADB) calculated the likely effect of the disease under different epidemic scenarios, and forecast losses totalling up to $20bn in the four most vulnerable economies - China, Hong Kong, South Korea and Taiwan.

In the case of Hong Kong, the ADB predicted the Sars could knock four percentage points off economic growth this year - taking it down more or less to zero.

The bank's official assumption is that the outbreak will be contained within two months, but these gloomier figures are based on the disease remaining unchecked for half a year.

Climate of fear

Sars has so far killed more than 500 people worldwide, mainly in China and Hong Kong, and infected at least 7,000.

But its economic impact could be felt disproportionately in Asia, the ADB said.

The cost of Sars

Asian economies are heavily dependent on tourism, which accounts for at least 10% of gross domestic product in most of the affected countries.

And regions such as Hong Kong and Singapore are almost completely dependent on the sort of service industries that demand regular and varied human contact - something many in the region are eager to avoid.

"When Sars hits an economy, it causes uncertainty generated by fear and this has direct and indirect effects like a loss of consumer confidence; tourism suffers, investment drops and government revenue also drops," said ADB chief economist Ifzal Ali.

Many companies have temporarily closed down their operations around Asia, and visitors to some destinations have fallen by half or more.

Could try harder

Some of the economic damage could be moderated if more accurate and timely information were available on the disease, the ADB said.

"A lack of information creates difficulties for individuals to accurately evaluate the consequences of a particular event," the bank said.

"This naturally leads to a somewhat exaggerated perception about the danger of the disease."

At the same time, governments should be aware that Asian borders are considerably more open than they have traditionally been, and that the flow of goods and people can contribute to the spread of the disease.

The ADB said that governments in the region should cooperate more fully to contain this and future outbreaks, and that state spending on healthcare may have to rise as a result.

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