If Asia's experience during the Severe Acute Respiratory Syndrome outbreak in 2003 is any measure of things to come, the region's economies may find themselves in a much deeper hole should swine flu spread.   Economists and industry leaders are closely watching the spread of the swine flu.

Should a severe outbreak of the flu occur in Asia, economists and industry executives fear the economic damage would be worse than that of the Severe Acute Respiratory Syndrome outbreak in 2003.

The SARS Effect:

SARS killed almost 800 people, 299 of them in Hong Kong.  Economic activity in the territory was brought to a virtual standstill as health care workers tried to halt the spread of the virus.

The chief economist of Economic Research Analysis in Hong KongConnie Bolland says she is more worried about the swine flu than SARS because of the way the virus appears to spread.

"The SARS, I did an analysis and the impact on Hong Kong is very little economically speaking because people don't travel so much and they spend more at home," Bolland said.  "If this outbreak is genuine and not being contained, because it's human-to-human (infection), the impact can be potentially disastrous ... If that outbreak escalated to a very serious level, all economies will be affected.  By then you will have travel ban, a lot of shopping, trading would be stopped, a lot of cross-border travel curtailed. It would be worse than the SARS."

In 2003, Hong Kong's economy suffered as tourists and business executives deferred travel to the territory and residents stayed away from restaurants and malls.  But the outbreak was contained within a few months.

This week, transportation and tourism stocks in Asia dropped the most when news broke of swine's flu's spread outside North America. 

Association of Asia-Pacific Airlines Director-General Andrew Herdman says the outbreak is occurring when the industry can least afford it.  The association's 17 members combined carried nearly 11 percent fewer passengers in March from the same period last year.

"We are in a midst of an industry downturn, we had a very difficult year last and this year is proving to be even more challenging," Herdman said.  "So if the outbreak were to turn to pandemic, in that scenario, clearly it would have a much more severe impact on travel and would be yet another thing we have to contend with."

Travel bans are unlikely:

Officials at the World Health Organization have indicated travel bans are unlikely, because the virus has begun to spread all over the world.  It was first identified in Mexico, where it is thought to have caused more than 150 deaths.  But confirmed swine flu cases have been found in Europe, Israel, the United States, Canada and New Zealand.

Bolland says a quick response to such an outbreak in Asia is key to preventing a deep economic crisis.

"Closing down of schools and setting up of detection centers, treatment centers, imposing travel bans in countries where most number of outbreaks occur, advising organizations to reduce physical contact, work from home, work on shifts ...," Bolland said.  

New Zealand has confirmed the first cases of swine flu in the Asia-Pacific region. Governments throughout Asia are stepping up disease surveillance and readying contingency plans.

On Wednesday, stock markets in Asia recovered from two days of flu-related selling. Hong Kong's Hang Seng index rose 2.8 percent. South Korea's KOSPI gained nearly three percent and Shanghai's main index closed 2.8 percent higher.