Accessibility links

Breaking News

SARS Remains Big Story in Asia Business - 2003-04-28

Atypical pneumonia fears are putting a brake on the economic picture in East Asia, while some enterprises in India are steaming ahead into stronger profits.

The economic damage from Severe Acute Respiratory Syndrome, or SARS, remains the biggest story in many Asian economies. The negative effect on tourism and travel is especially strong in Southeast Asia, so strong that Hong Kong-based Cathay Pacific Airlines is making additional temporary cuts in its flight schedule. A spokesman says the airline has now canceled 218 weekly flights, 45 percent of its regular schedule. There is no prediction from the company on when air traffic might rebound.

The international credit rating agency Fitch Ratings says SARS is the reason it has downgraded its rating on Hong Kong-dollar debt, from "stable" to "negative". "In many ways we see SARS as just one negative shock too far, really, says Brian Coulder, an analyst for Fitch. "And in particular, we're worried about the re-emergence, or the re-acceleration, of deflation."

Fitch does point out that Hong Kong has several major strengths, including large fiscal reserves and a strong banking system. On Wednesday, the Hong Kong Government announced a $1.5 billion economic relief package for companies affected by the SARS outbreak.

Malaysia is pledging to speed up the release of its own economic stimulus package. Acting Prime Minister Abdullah Ahmad Badawi says the package will include proposals for banks to lower interest rates and to restructure troubled loans. Officials say the plan will probably be released by June. Malaysia's growth forecast has already been cut once this year, to four-point-five percent, and the government fears it may slide even further.

Standard and Poor's ratings agency is expressing a vote of confidence in Malaysia's state-controlled Petronas oil company. S&P says new operations should enhance Petronas's cash flow. S&P also cautions, however, that Petronas's revenues could be affected by uncertain political conditions abroad.

United States automaker General Motors expects export sales from its South Korean Daewoo subsidiary to double this year. Nick Reilly, president of GM Daewoo Auto and Technology, says the company is performing ahead of plan.

India's largest carmaker, Maruti Udyog, also expects total sales to rise, by at least ten percent for the year ending March 2004, following a price cut for various models. The company is 54 percent owned by Japan's Suzuki motor corporation.

India's government says software exports from the southern state of Karnataka jumped 25 percent in the year that ended last month. Officials say the sluggish global economy is leading many companies to outsource so-called "back office" duties, such as call centers and forms processing, to India.