Sars costs Asia $11bn, and the bill is still rising

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The economic cost of severe acute respiratory syndrome (Sars) is $11bn (£7bn) and climbing fast, Far Eastern experts have calculated.

The economic cost of severe acute respiratory syndrome (Sars) is $11bn (£7bn) and climbing fast, Far Eastern experts have calculated.

The deadly pneumonia-like disease has led governments across the region to shave economic growth forecasts, as people stay away from shops and restaurants, travel plans are cancelled and big events are scaled down or postponed.

The financial impact of Sars in Hong Kong could be as high as $1.7bn, and $2.2bn in China where it originated, new figures suggest. The Chinese government is set to change the way it defines patients with Sars symptoms, the World Health Organisation (WHO) said yesterday, and the effect is likely to be a big increase in the numbers of reported cases. So far, 3,000 people around the world have been infected, and 160 have died.

Calculations by the Far Eastern Economic Review, to be published next week, suggest that the economic toll could also reach $2bn in South Korea, $950m in Singapore and $1.1bn in Japan. The figures – which add up to $10.6bn – were calculated using national governments' predictions of how Sars will hit GDP growth.

The WHO estimates that the global cost of Sars could reach $30bn.

Airlines have had to ground flights and run reduced capacity while the spread of the disease shows no signs of abating. Japan Airlines and All Nippon Airways, Asia's two largest carriers, yesterday said overseas flight bookings for Japan's forthcoming holiday week have dropped sharply as a result of the virus. Japan Airlines said overseas flight reservations had fallen 37 per cent, while All Nippon's overseas bookings have dropped 34 per cent. Hong Kong-based Cathay Pacific Airways has cut 37 per cent of its weekly capacity and warned it may have to ground its entire fleet if the panic does not subside.

The Asia-Pacific airline industry trade body yesterday urged Hong Kong's airport to join others in the region and lower charges to help airline carriers survive the crisis.

Hong Kong, Singapore, Malaysia and Thailand are highly tourist-dependent economies. The world famous Mandarin Oriental hotel in Hong Kong has said occupancy rates have fallen below 10 per cent, while occupancy rates in Malaysia have dropped to as low as 30 per cent. Hong Kong retailers are reporting that sales have fallen 50 per cent since mid-March on the back of an 80 per cent drop in tourist arrivals.

Meanwhile, Opec yesterday lowered its forecast for global crude oil demand this year on concern the Sars virus will hurt economic growth. The oil exporters' group reduced its projection for worldwide consumption to 77.35 million barrels of oil a day, 80,000 barrels a day less than it had forecast last month.