The outbreak of Severe Acute Respiratory Syndrome (SARS) has large impact on spending, particularly on consumer spending in some Asian countries and regions, but the impact is temporary, according to the Citigroup Asset Management (CAM) Tuesday.
Anthony Muh, head of Investments for Asia of Citigroup Asset Group, made the remarks at a press conference on the second quarter global investment perspective.
He said that the outbreak of SARS and war in Iraq greatly complicates outlook for Asian growth and the regional growth will be slower in 2003 than in 2002, but Asian growth will beats most comers.
He said he believed that further forecast downgrade are likely if the epidemic last longer than expected.
Muh said consumer demand strength, which has been a feature in the less open economies of Asia, should recover in the post SARS period.
He said that a number of Asian countries and regions have large savings firepower, pent-up demand, availability of consumer credit and easy monetary conditions.
He said exports and consumer spending will also grow and hence even in the most open economies.
He said the Chinese mainland, remaining an engine of regional trade, may only adjust forecast for its annual economic growth rate this year from 7.5 percent to 7.3 percent.
He said the Chinese mainland's exports and imports grew strongly in the past few months this year and industrial output and retail sales also witnessed an increase at the beginning of this year.
He said countries and regions most affected by SARS will be Hong Kong, Singapore, Malaysia and Thailand, which have high SARS incidence, bigger share of tourism in GDP among Asian countries and where consumer demand is large as a share of GDP.
In those three countries and a region, the annual visitor spending all account for over 5 percent of each region or country's GDP.
He said a research finding of Thomson Financial Datastream and the CAM indicated that forecast of Hong Kong's economic growth rate in 2003 may downgrade from 3 percent to 1.4 percent and that of Singapore from 3.1 percent to 2.6 percent.
However, he said, Hong Kong has its own advantages. HK's exports have surged at the beginning of this year, mainly due to re-exports from China's mainland, and Hong Kong has plenty of money around, though no one is borrowing it. As those who need money could not afford to borrow.
He said as far as he knew, orders of trade are still coming to the Asia-Pacific region now and some other trade programs have just been postponed for a while, but not canceled.
(Xinhua News Agency April 16, 2003)
