Economic impact if SARS strikes Singapore again
SARS the deadly coronavirus
Based on the lastest news, Saudi Arabia has detected another 6 new cases of SARS. This brings the total number of persons afflicted up to 30. 15 has since died. Besides Saudia Arabia, the deadly virus was also detected Jordan, Germany, Britain and France.
SARS or severe acute respiratory syndrome is a viral respiratory disease in humans. A outbreak in 2002-2003 claimed 8,273 cases and 775 deaths worldwide. Mortality rate is highest among victims aged 65 or more.
If SARS comes to Singapore again with this outbreak, the economic impact could be higher than before. Burden will likely fall on Hotel, Food and Beverage and Transportation.
The economic impact of SARS 2003 on Singapore
SARS first reached Singapore in February 2003. 3 Singaporean women returned from Hong Kong where they stayed at the same hotel. They caught the virus from an infected hotel guest (a doctor from Guangzhou, China). Two of them recovered but one went on to infect 22 close contacts. By the time the SARS outbreak was contained in May that year, 238 persons were infected. 33 died.
Of the economy, major sectors affected were tourism and transport.
“Singapore’s exposure to SARS has cost it nearly US$570 million, or close to S$1 billion. The effect has been so damaging that Singapore’s unemployment level has moved to a record high of 5.5 percent.” “Singapore’s tourist sector has been decimated,” said Angeline Woo, the general manager of Trans-Global Travel Services based in Hong Kong. “We are seeing fewer bookings of tourists going to Singapore from Hong Kong. It has dropped by almost 70 percent over the last four months.” “Singapore Airlines for instance has slashed 298 flights from its weekly schedule, causing a near 28 percent reduction while layoffs in its engineering section are to be announced later,” said a senior traffic engineer with SIA Engineering Division.”
“The drop in real GDP in Q2 alone due to SARS is estimated at 17% on an annualized basis, compared to the actual decline of 9.8%. Translating this into year-on-year changes means that the entire contraction of 3.8% in Singapore’s GDP from April to June can be accounted for by the SARS outbreak.”
Visitor arrival, hotel occupancy important economic indicators to new economy, integrated resorts
Since 2003, the Singapore economy has made structural changes with more emphasis on Tourism and Finance. It is hard to think of the impact if arrivals and occupancy at the integrated resort were to look like 20-30% only.
“All major markets (visitor arrival) registered double-digit falls in arrivals, with Japan (-75%), Malaysia (-72%), China (-64%) and Indonesia (-61%) recording the largest absolute declines.” “The average hotel occupancy rate had fallen to 20% to 30% in April 2003, compared to 75% in February 2003 and 74% for the whole of 2002. Some hotels have reported occupancy rates as low as 10%.”
Visitor arrival and hotel occupancy are important economic indicators to look at. Thanks to Singapore Department of Statistics for making statistics look sexy “Trends in Visitor Arrivals by Country of Residence” but this interactive chart shows us more reliant on tourist arrivals from Indonesia and China than ever before. Then finally this chart is something no stock market investor wants to see.