Within China, the first recorded case in Beijing occurred on March 5. The numbers of probable cases in Beijing began accelerating at the beginning of April, peaking at over 100 per day in the latter part of the month. (Liang _et al_ 2004). The Beijing local government sharply revised up the SARS caseload in the city from 37 to 339 on April 19. (Beech 2003). In another week, even this number tripled. On April 23 reports from the scene described thousands of people at Beijing West rail terminal attempting to flee the city. By April 26 journalists were estimating that a million people (a little under 10 percent of Beijing’s population) had left the city. (Pomfret 2003b). Highlighting the gravity of these developments, Huang (2004) argues that “The SARS epidemic was not simply a public health problem....it caused the most severe sociopolitical crisis” in many years.

The most significant economic impacts from SARS occurred in the four East Asian economies with the highest number of probable cases: China, Hong Kong, Taiwan (China) and Singapore. The major source of the economic impacts experienced in these economies were the large, though short-lived, negative demand shocks induced by the efforts of individuals to avoid becoming infected, leading to steep reductions in foreign and domestic tourism, as well as reduced domestic traffic for services sectors such as retail stores, hotels, restaurants and transportation. Lee and Mckibbin (2003) also point to the possibility of increases in business costs due to supply side disruptions and of increases in economies’ risk premiums in international capital markets. However it was the negative demand effects that predominated in practice.

Hai et al (2004) report on a survey of businesses in Beijing carried out on April 18. Tourist attractions, exhibitions and 4/5 star hotels reported a loss of revenue compared to a year earlier of around 80 percent, while travel agencies, airlines, railways, restaurants, retailers and taxis reported declines in revenue of 10-50 percent. Hanna and Huang (2004) estimate that China’s GDP contracted by over 5 percent in the second quarter of 2003 on a seasonally adjusted annualized basis, or a loss of around 0.5 percent of GDP for 2003 as a whole. Siu and Wong (2004) document similar demand side impacts on tourism and other services sectors in Hong Kong, leading to a fall in GDP in the second quarter of 2003 of 10.5 percent from the previous quarter, at a seasonally adjusted annualized rate. Leading the decline were a 43 percent drop in services exports (principally tourism) and a 7.9 percent drop in personal consumption by residents (both at quarter on quarter, seasonally adjusted annual rates). Exhibit 1 illustrates the pattern of a sharp GDP decline in the second quarter followed by a robust rebound in the third for not only Hong Kong but also Singapore and Taiwan (China). Calculating the counterfactual of how the economy would have grown without SARS is an uncertain and complicated matter. We note that Hong Kong real GDP was growing at a year on year pace of around 4.5 percent in the two quarters before SARS and in the two quarters after it. Making the simple minded assumption that the economy would have grown at 4.5 percent throughout the year without SARS leads to an estimated 1.1 percent loss in GDP for 2003 as a whole as a result of SARS. Using a more sophisticated econometric approach, Fan (2003) estimated a similar sized GDP loss for Singapore. Chou et al (2004) use a computable general equilibrium model to estimate a 0.6-0.7 percent GDP loss for Taiwan (China).

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