A United Nations survey says Asia-Pacific economies, especially those reliant on tourism, face lower growth rates over 2003 due to the uncertainties from the war in Iraq and the spread of the Severe Acute Respiratory Syndrome. A United Nations economic survey forecasts that Asia's economic growth will hover close to five percent this year, more than double the world average of 2.3 percent. However, growth will be slightly slower than the 5.4 percent forecast earlier.
The survey by the Economic and Social Commission for Asia and the Pacific says widespread geopolitical uncertainties and the spread of Severe Acute Respiratory Syndrome will trim regional growth.
The annual survey released Thursday says much of the region's growth has come from domestic government spending programs as well as the strength of China's economy.
Kim Hak-Su, the U.N. executive presenting the report, says despite the SARS virus, though to have originated in southern China, the Chinese economy holds the key for overall regional growth.
"China could be the engine of the Asian-Pacific economic growth, and maybe let's say around seven percent [growth]," said Mr. Kim. "China's engine is trade export and construction. Personally I am very confident China will maintain the high economic growth despite [the impact of] SARS."
Mr. Kim says the period of uncertainty prior to the Iraq war, from late November until March, slowed investment and spending in the region more than the war itself did. Companies had feared oil prices would stay high and shipping would be disrupted. However, oil prices are falling and other fears have faded as the war winds down.
Now SARS is the big concern, as people around the world avoid travel to Asia because of the virus.
"Hong Kong, Singapore will be most affected by this SARS," he said. "Firstly, travel, tourism, restaurant and hotels …and will go beyond that to the retail sector."
The U.N. report also stresses that governments must continue reforming their trade and financial sectors to ensure that longer-term growth is not jeopardized. The report also encourages Asian countries to continue improving education and health care, as part of their efforts to reduce poverty, and to protect the environment.