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Hong Kong Economy Worsened by SARS


Hong Kong government data are providing a more detailed economic picture of the effects of the outbreak of Severe Acute Respiratory Syndrome, or SARS. Hong Kong released its first quarter economic report this week, along with preliminary figures on Gross Domestic Product. The report says the territory's economy displayed strong growth momentum at the start of the year - but worsened abruptly in mid-March, when SARS began spreading and travelers canceled trips to Hong Kong.

The report says consumer spending fell more than two percent in real terms, year-on-year. Unemployment rose from 7.2 percent in the final quarter of 2002, to 7.8 percent in the second quarter of 2003. Hong Kong government economist K.Y. Tang says those numbers are an indicator of the SARS effect.

Mr. Tang says the SARS outbreak has affected the consumption and tertiary industries, namely tourism and catering. He says those industries are labor-intensive, so this affects the unemployment rate significantly.

South Korea's industrial output slowed to 1.8 percent in April, year-on-year. That is a sharply lower rate of increase than the five percent rise recorded in March. The country's National Statistics Office cites a slowdown in domestic demand and in output of semiconductors.

On the positive side, South Korea's current account deficit narrowed in April to about $386 million, from $1.1 billion in March. The Central Bank of Korea credits lower oil prices and an overall rise in exports.

Philippine government officials say the economy is doing well, expanding 4.5 percent year-on-year in the three months to March. Philippine Economic Planning Secretary Alberto Neri credits robust consumer confidence for pushing expansion towards the high end of official forecasts.

Singapore officials say April industrial output fell five percent from a year earlier, coming in well below government forecasts. Singapore's Economic Development Board does not specifically mention SARS in its report. It points to weak information technology spending and demand. Singapore's electronics sector, which accounts for half its entire industrial output, contracted by 5.3 percent in April year-on-year.

Singapore leaders say they hope to conclude negotiations within a year for a free trade agreement with India. They would like to see the city-state become a sort of "Hong Kong" for India, in the sense of an international point of access to India's opening economy. Singapore is heavily dependent on external trade, and has already signed free trade agreements with the United States, New Zealand, Australia, and Japan.

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