Economic Impacts of SARS Essay

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SARS

Severe acute respiratory syndrome (SARS) broke out in China in 2002, in Guangdong Province. This area is an industrialized region that lies at the heart of China's economic strategy. Cities like Guangzhou, Shenzhen and Dongguan are all major manufacturing hubs, the former two also shipping hubs. SARS was a form of pneumonia, and spreading from Guangdong it infected 1622 people in 13 countries, causing 58 deaths (Cyranoski, 2003). A doctor visiting nearby Hong Kong is believed to be responsible for the spared of SARS outside of China, though most commonly among medical professionals.

Social Factors

SARS was an issue because it was an unknown disease, and because of the nature by which it spread. People who came into contact with victims could catch the disease, and it is by this means that it traveled to multiple locations around the world. Most of these locations were in Asia, but there was also a cluster in Toronto, again concentrated among health care workers. SARS was damaging to China, however. The World Health Organization posted travel advisories, not just to Guangdong but to other regions of China as well, plus Hong Kong. (WHO, 2003). This travel advisory caused a degree of panic among people, and had impacts on business in the country.

In total, over 8000 globally were infected, and of those 900 died. The economic impact was significant. Mainland China saw its GDP decline by 1.05% in 2003, and in Hong Kong the decline was 2.63%. It is also worth considering that these areas face a lingering country risk premium, meaning that businesses and travelers were for years less likely to go to these areas out of concerns for future outbreaks (Lee & McKibbin, 2004).

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Important to remember is that SARS was more or less contained. While it affected thirteen countries, there were only a few thousand people affected. The swine flu a few years later affected many more people. But SARS had pandemic risk. Experts warn that had SARS not been contained, it could have cost the global economy $3 trillion, or 5% of GDP, and likely it would still be a lingering issue (Frangoul, 2014).

Economic Factors

China was the epicenter for the SARS epidemic. It hit in one of the country's most productive economic regions, which complicated matters with respect to the economic cost of SARS. In addition to the decline in GDP of 1.03% for 2003, the SARS epidemic has a lasting, ripple effect It served to curtail future investment in China for a few years, especially to the affected region. This decline in confidence for foreign investors may, however, have simply resulted in a shift in doing business to other parts of China, in particular the Yangtze region around Shanghai, Suzhou, Ningbo and Hangzhou. Industries that were most exposed where those in the service sector, which could not move as easily, and some of those industries suffered declines of 15% or more. Costs in this industries increased 5%, partially to mitigate risks. However, the negative effects of SARS were short-term, and once it was contained it only took a year or two to get back onto normal growth patterns in the affected areas. Further, China's economy as a whole did not suffer -- it was more localized and many businesses simply set up in other regions of China that were not as affected by the outbreak (Lee & McKibbin,

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