SARS takes economic toll on Asia

May "golden week" is a holiday that shuts down official China. Millions head for trains, planes, and automobiles to visit family and head for regional resorts.

Last year, 87 million Chinese, many in the new middle class, hit the road during golden week, Beijing tourism officials say. But this spring, fears over the epidemic known as SARS (severe acute respiratory syndrome) has cast a hemispheric-sized wet blanket over a traditional time of travel and spending along the Pacific rim - one now racking up a sizable economic toll across Asia.

Diagnosed SARS cases are rising slowly, but popular worries are jumping exponentially, gouging Asia's pocketbook. Morgan Stanley in Hong Kong expects SARS to bring a 0.6 drop in GDP for Asia, from 5.1 percent to 4.6 percent (excluding Japan).

Behind the sterile numbers are painful sudden dollar losses - measured in half-full hotels, laid off cooks, closed businesses, departing work forces, canceled conferences and exhibitions, and other interruptions of normal trade.

"If the SARS scare lasts much longer or is prolonged as a crisis, it may begin to have a negative impact on overall exports in Asia," says Lee Sung-kwon, chief economist with Goodmorning Shinhan Securities in Seoul, South Korea. "Right now it is mainly affecting service exports like tourism. But it could begin to undermine other sectors."

Hardest hit are China including Hong Kong, Singapore, and Taiwan. But fiscal reverberations are felt from Australia - where 1,000 Quantas airline employees were laid off - to Bangkok, a recent mecca for Chinese tourists, who as of last week can no longer obtain a visa for Thailand.

An executive memo circulating at Cathay Pacific, the Hong Kong-based airline, describes $3 million in losses per day and a possible closure of that air carrier. Traffic in and out of Hong Kong is a third of what it was last year, airport authorities say.

Last week, for the first time in its history, the Geneva-based World Health Organization issued a travel advisory, warning visitors to consider delaying trips to China. Monday, Chinese President Hu Jintao said he was "very worried" about the outbreak, while Premier Wen Jiabao was quoted in state media describing the situation as "grave."

New cases show up in far-flung places, usually along Asian travel routes, and photos of hardest-hit Hong Kong with streets full of citizens wearing surgical masks contribute to a pandemic mind-set that brings economic consequences.

Losses can be indirect, such as the reported drop in revenue by Hong Kong's SmarTone cellphone firm. There's a possible departure of thousands of the city's Filipina housekeepers, as well. Cuts can loom in larger ways too: Singapore Airlines has delayed acceptance of 10 Boeing 777 aircraft.

The swanky five-star White Swan hotel in Guangzhou, China, is usually full in mid-April. But with few attending a famed local trade fair this year, occupancy is 45 percent, and rates are down from $280 to $180 a night, sources say. Visits by Japanese to Hong Kong during Japan's own golden week, which starts April 24, is down 88 percent, according to JTB corporation in Tokyo.

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