Asian economies to witness slowdown as SARS virus spreads: Study

The report says that intra-Asian trade accounted for 22.4 per cent of ASEAN’s global trade in 2001. In the wake of the widespread nature of the disease, this trade volume stands to go down drastically.

In case of China and Hong Kong, almost 61 per cent of trade is accounted for by the intra-regional exports and imports. For most countries the proportion is over 50 per cent and the spread of SARS could lead to sharp disruptions in intra-regional trade at least in the short run, the report mentioned.

Despite varying patterns of industrial growth, trade, services and investment networks within Asia, several countries in the region may get affected since the extent of intra-regional trade in goods and services within Asia has grown significantly. Other than services and manufacturing, knowledge sector including information technology is also likely to get affected by SARS, specially if movement of personnel is restricted.

Another impact could be on industrial relocation and investments, feels Ficci as recent trend reveals that FDI inflows into Asian region are largely sourced from within the region. The rising incidence of SARS may affect this restructuring pattern in the short term by affecting human resource inflows.

Intra-regional FDI contributes a substantial proportion of FDI inflows into China (70 per cent), Thailand (55 per cent), Malaysia (44 per cent). Further, China has not only been attracting substantial amount of FDI, but has also seen considerable relocation of industries within Asia, which can now be stalled due to SARS for some time.

While referring to UNCTAD findings, the Ficci report said that since almost all of these economies have reported SARS, travel will be affected with repercussions on profitability. As per UNCTAD statistics, China, Hong Kong, Korea, Taiwan, Singapore, India, Thailand and Malaysia figure among the top 20 exporters of services.

The SARS impact is also set to negatively affect the travel and tourism industry, which is most countries of the region account for a sizeable proportion of the GDP. Hotel occupancy in Hong Kong and Singapore is already down while tourism and restaurant sectors have reported a 20 per cent decline. In Thailand, the damage to travel and tourism industry has been estimated at 40-70 billion baht. In addition to the travel and tourism sectors, retail sales, electronics industry and manufacturing in East Asia have been sharply hit.