Reserve Bank of Australia
August 2003
Box A: Severe Acute Respiratory Syndrome (SARS)
The world economy has been subject to a
series of ‘one-off ’ events over recent years,
the latest of which has been the outbreak of
the respiratory disease known as SARS in
mid March. Initially, the disease spread
quickly, sparking fears of a possible global
health crisis. However, effective public health
responses meant that by early July, the World
Health Organisation (WHO) was able to
declare the SARS outbreak contained and
had lifted all SARS-related travel warnings.
In total, around 8 500 cases of the disease
have been detected and 800 deaths recorded,
with countries in east Asia most affected
(Graph A1). The number of cases has been
considerably less than that initially feared
and much less than the 250 000 to 500 000
deaths that occur worldwide from influenza
each year.
International organisations generally
estimated the adverse effect of SARS on
GDP growth in non-Japan Asia to be around
1
/ 2 percentage point, with the effect
concentrated in the June quarter. The
economic impact was quickly apparent in the
international travel data. Given their heavy
reliance on tourism, and their importance
as business centres, Hong Kong and
Singapore have been the hardest hit, with
international arrivals falling by 70 per cent
between March and May (Graph A2). The
effect of this fall was compounded by a sharp
drop in spending by domestic residents with
retail sales falling by 81/2 per cent in Hong
Kong in April. While international arrivals
and retail spending have since recovered
somewhat, both the Hong Kong and
Singapore economies appear to have
contracted sharply in the June quarter.
China’s economy was also adversely affected
by SARS in the June quarter, although yearended growth remained almost 7 per cent.
More generally, the economic effect of SARS
on east Asian economies seems to have been
less than was originally feared.
While SARS was largely confined to Asia,
it led to a world-wide downturn in
international travel that affected many
countries, including Australia. Internal
quarantine arrangements saw a sharp dropoff in international travel from SARSaffected countries, and by those travelers
from Europe and the United States seeking
to avoid Asian stopovers. There was also less
Graph A1
Graph A2
Reported Worldwide Cases of SARS
International Arrivals to Asia*
Cumulative, 2003
’000
’000
Taiwan
M
M
2.5
8
7.5
8
China
(RHS)
2.0
6
6.0
6
1.5
Singapore and
Hong Kong
China
4
4.5
Hong Kong
4
(LHS)
1.0
3.0
Singapore
(LHS)
2
2
l
0
Mar
l
Apr
l
May
l
Jun
Rest
of
world
Jul
0.5
1.5
Taiwan
(LHS)
0.0
0
1998
1999
2000
2001
2002
2003
0.0
* Seasonally adjusted by RBA
Source: CEIC
Source: WHO
11
August 2003
Statement on Monetary Policy
outbound travel from those countries that
are traditionally sensitive to travel warnings,
such as Japan. For Australia, the drop-off in
inbound travelers from Japan contributed
significantly to the decline of around
20 per cent in international arrivals between
January and May this year. In June, however,
there was some pick-up in international
travel with overseas arrivals increasing from
south east Asia, while arrivals from China
and Japan remained very low (see Graph A3
and the chapter on the ‘Balance of
Payments’). Furthermore, airport bodies
report that the recovery in arrivals continued
into July and that forward bookings for
August are looking more positive. R
12
Graph A3
Overseas Arrivals to Australia
Contribution to three-month percentage change
% pts
UK
US
Japan
China
South % pts
east Asia
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
Jan
03
Jun Jan Jun Jan Jun Jan Jun Jan
03 03
03 03
03 03
03 03
Source: ABS
-4
Jun
03