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SARS impact 'below 1997-98 crisis'
HONG KONG, China (CNN) -- Merrill Lynch regional economist Timothy Bond has downplayed the impact of the SARS virus on Asian economies, telling CNN it will be much less than the 1997-98 Asian financial crisis. Bond said Thursday that he doubted there would be much of a region-wide impact from the devastating illness. But he said he could see a "couple of quarters of negative growth" for Hong Kong and Singapore. Other regional economists such as Morgan Stanley's Andy Xie have already identified Hong Kong and Singapore as likely to bear the brunt of the SARS impact, because of their role as transport and tourism hubs and as centers of international business. (Full story) Hong Kong, in particular, relies on visitors from China for much of its tourism revenue. Travel to Hong Kong is expected to further decline sharply, following the announcement from the World Health Organization on Wednesday that it is advising people against visiting Hong Kong and the neighboring Chinese province of Guangdong, thought to be the source of the disease. (Full story) SARS, or severe acute respiratory syndrome, has killed at least 75 people and infected more than 1,800 in 15 countries around the world -- the vast majority of them in China and Hong Kong. Morgan Stanley's Xie said earlier this week that if the disease was not contained over the next month or two, a number of Asian economies would face recession, with Hong Kong most at risk, followed by Singapore and Taiwan. He identified SARS as the most serious issue facing the region since the Asian financial crisis. In that crisis, Asian economies were rocked by tumbling currencies and equity markets from mid-1997 onwards, resulting in International Monetary Fund-led bailouts for South Korea, Indonesia and Thailand that cost billions of dollars. Some economies -- notably Indonesia -- fell into recession and it was several years before the region generally recovered. On Wednesday, Xie said Morgan Stanley was downgrading its 2003 economic growth forecast for East Asia (excluding Japan) to 4.5 percent from 5.1 percent. He said this was to take account of the impact of SARS for one quarter and assumed that the situation would normalize in the third quarter of the year. He identified China as the "wild card" where a lack of transparency made it difficult to estimate the SARS impact on the economy. Merrill Lynch's Bond told CNN on Thursday that it was hard to assess the China situation because information was still being gathered on how widespread the disease was. But he said he doubted that SARS would tip the global economy into recession. That conflicts with the view of leading Wall Street economist Stanley Roach, who is predicting a global recession this year, in part because of SARS. Roach, Morgan Stanley's chief economist in the United States, told CNNfn in New York that SARS is "just another nail in the coffin for the world economy." (Full story) "You've got war, SARS, uncertainty, and imbalances that will prevail after the war is over and until a cure for the disease is found," Roach said.
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