Date: April 2003

East Asian Economies To Suffer From SARS

An international investment bank has predicted that the presence of a mysterious pneumonia virus in East Asia would depress economic growths in the region this year.

In its latest report, Morgan Stanley has revised its 2003 growth forecast for East Asia excluding Japan to 4.5 percent - down from the original 5.1 percent "to take account of the impact of the severe acute respiratory syndrome (SARS) for one quarter."

Experts believe that SARS originated from Guangdong, China and would continue to spread in many countries until a cure is discovered. As of last week, the World Health Organization (WHO) reported that over 70 people of around 2,000 patients infected with SARS in 18 countries had died because of the virus.

Morgan Stanley described the virus as the largest single factor that could affect the East Asian economies since the 1997 Asian financial crisis. It added that tourism revenues in East Asia alone could contract by as much as 15 percent this year because of the contagious health virus. For one, Standard & Poor's said tourism revenues in Hong Kong could drop by a hefty 65 percent this year.

In its forecast, Morgan Stanley said China would grow by 6.5 percent this year; South Korea, 3.5 percent; Thailand, 3.5 percent; the Philippines, 3.1 percent; Indonesia, 3 percent; Malaysia, 3 percent; Taiwan, 2.3 percent; Hong Kong, 2.1 percent; and Singapore, 2.1 percent.

Such forecasts are lower than the forecasts of the Asian Development Bank (ADB), which has yet to issue another outlook following the Iraq war and the outbreak of SARS in Asia. The ADB had earlier predicted that the Philippine economy would post a 4.5 percent growth in 2003, well within the government's target range of 4.2 to 5.2 percent. The country's gross domestic product (GDP) expanded 4.6 percent in 2002.

The National Economic Development Authority (NEDA) has expressed optimism that the Philippine economy would grow 4.2 percent in a "worst-case scenario" in 2003 and may even expand by as high as 5.2 percent in case that the war in the Middle East ends briefly.

The government's figure did not take into account the presence of SARS in East Asia. As this was being written, the Philippines was said to be free of SARS although health authorities were monitoring several suspected cases of the virus.

One Filipino housemaid in Hong Kong died because of the virus on March 24. She was cremated in Hong Kong and her ashes were enclosed in a wooden box and buried in her native province of Abra (northern Luzon). Health officials said over 10 other housemaids in Hong Kong and Singapore have been diagnosed with SARS. They would not be allowed to come back to the country until they are fully recovered.

Last week, the Philippine government began tasking health authorities to implement quarantine procedures at all points of entry, including air and seaports. Medical professionals attending to arriving passengers also began wearing protective masks. Around 100 people, suspected of carrying the virus, were confined in different hospitals in the country. It would take at least one week before health officials can confirm if they are really carrying the virus.

A 41-year-old Filipino housemaid from Singapore was held in a government hospital after she showed symptoms of the disease upon arrival at the Ninoy Aquino International Airport. She would not be released until she had passed the so-called 10-day incubation period.

The Philippine government is trying to prevent the disease from coming to its shore. It knows fully well that its hospitals are ill prepared to handle a disease as mysterious as SARS. Philippine hospitals cannot even prevent the death of hundreds of Filipinos infected with the familiar dengue fever each year.

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