- The Washington Times - Wednesday, April 30, 2003

Each new victim claimed by the Severe Acute Respiratory Syndrome (SARS) in East Asia causes an exponential impact on the region's economy. But the toll on America's growth will be neither severe nor acute, if the epidemic is contained within currently affected countries. While SARS may have an industry-specific impact in America, it will have a negligible affect on the U.S. economy as a whole.
According to the World Bank, the SARS outbreak and the war in Iraq are expected to reduce economic growth in East Asia by nearly one percentage point to 5 percent. SARS has hurt production and activity in the region, as factories are closed after workers come down with SARS and tourists stay away from the region. Native consumer demand has also been dealt a severe blow, as would-be shoppers stay home and wariness of an economic slowdown cause Asians to tighten their belts.
According to the Organization for Economic Cooperation and Development, Asia, not including Japan and South Korea, accounted for almost 45 percent of growth in global trade volume last year. This year, before the March SARS outbreak, the region was expected to account for over 30 percent of that trade volume.
Canada's economy will also be weakened by the SARS factor. Some economists also expect SARS to slow growth in Canada by an average of 0.1 percent this month and next.
But the epidemic isn't expected to slow the $10 trillion U.S. economy in any significant way. And since America is one-quarter of the global economy, the international impact will remain contained as long as SARS doesn't spread out of control.
America's total exports of goods and services amount to about 10 percent of economic activity, or $1 trillion. Last year, about 18 percent of these exports went to Asia, not including Japan, and about 7 percent went to Japan. So, while SARS has reduced America's trade with Asia and could affect, for example, the makers of computers, software, machinery, industrial instruments the disease will have only a very small affect on the overall economy.
And, some of that trade with Asia will be delayed, but not eliminated. While America may lose some export opportunities to SARS, it will likely produce domestically some goods that it would have otherwise imported from Asia.
SARS has been a human and economic calamity for Asia, particularly China and Hong Kong. Other countries, such as Canada, have also been affected. People around the world are commiserating with those affected by the outbreak. But Americans shouldn't expect the epidemic to have any sizeable impact on the huge U.S. economy.


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