Eastday

Asian economies may be hurt by a slowdown in China after the world's most-populous nation said it had almost a third more cases of a deadly virus than previously reported.

China's growth this year may fall by half a point to 7 percent as citizens cut spending on travel and entertainment to avoid the disease, said Pu Yonghao, a Manila-based consultant to the Asian Development Bank's macroeconomic monitoring unit.

A drop in growth and consumption in China will compound the woes of a region already hurt by a slowdown in the United States and the spread of the virus, which is cutting sales at companies from Singapore Airlines to hotel operator Shangri-La Asia. The ADB reckons that China will replace the United States as the biggest importer of Asian goods by 2005.

"China's growth dropping substantially - below 7 percent - will reduce demand for overseas-made goods," Pu said. "That will put growth under pressure in rest of Asia, which is increasingly dependent on exports to China."

If severe acute respiratory syndrome lingers beyond this quarter, China's growth rate may dip below 7 percent, compared with last year's 8 percent pace, Pu said.

The outbreak of SARS came as a slowdown in the United States and disruptions caused by the Iraq war pared exports of Asia's cars, computer chips and other products. The index of leading US economic indicators fell in March for a second straight month, evidence that anticipation of the Iraq war dimmed the economic outlook for the next three to six months, a Conference Board report showed on Monday.

The International Monetary Fund predicts the US economy will grow 2.2 percent this year.

Singapore slashed its economic growth rate by half, to no more than 2.5 percent this year, because of SARS. Malaysia may follow suit, Acting Prime Minister Abdullah Ahmad Badawi said on Monday.

Economists had expected China, which posted 9.9 percent economic growth in the first quarter, to provide a cushion by ordering more Singapore-made computer parts and Thai seafood. That may not happen as many of the 70 million Chinese who traveled and shopped during the May Day holidays last year stay home after the government announced it would cut the holidays to five days from seven, pulling down retail sales and economic growth, economists said.

"We're trying to factor in how much the loss of Golden Week will cost the Chinese economy," said Tai Hui, an economist at Standard Chartered Bank in Hong Kong. "Before SARS, I was looking at 8 percent growth for the second quarter. Now, I'm more inclined to adjust it downwards."(Bloomberg News)