Scary headlines about a new viral outbreak. People peering nervously over their surgical masks while on public transport. Colleagues and friends refusing to shake hands. Ask anyone who was in Hong Kong in early 2003, and they may recall these as some of their most vivid memories of that period.
The Chinese territory was suffering through an outbreak of what came to be called Severe Acute Respiratory Syndrome (SARS). And with another deadly virus now emerging from mainland China, many people in the Asia Pacific region are reliving those worrying times.
More:
So, it is little surprise that economists are also drawing parallels between the economic damage that SARS caused 17 years ago and what could happen now. And Hong Kong is once again near the epicentre of the outbreak while its economy is on the ropes.
“The outbreak of a SARS-like coronavirus in (the central Chinese city of) Wuhan is developing into a major potential economic risk to the Asia Pacific region now that there is medical evidence of human-to-human transmission,” Rajiv Biswas, Asia Pacific chief economist at research firm IHS Markit, told Al Jazeera.
But a closer look at the economic fallout of SARS reveals a potential silver lining to the current outbreak: The region bounced back fairly quickly from the 2003 outbreak.
Since reports of a cluster of viral pneumonia cases in Wuhan first emerged around the start of this year, more than 200 people have been infected and several people have died.
Lunar New Year
Those numbers may not seem all that dire, for now.
But Chinese authorities now say the virus can be spread by human contact. And with the busiest time of year for travel in many parts of Asia just days away when the Lunar New Year celebrations begin – when millions of people in China and elsewhere board trains, planes and buses to visit their families – the potential for it to spread rapidly is worrying health authorities.
And that has also spooked financial markets.
On Tuesday, Hong Kong’s main share index fell 2.8 percent, its biggest one-day drop since early August. Shanghai’s benchmark stock index lost 1.7 percent, with airline companies hit particularly hard. But shares of drugmakers soared as investors bet their sales will rise as demand for prescription drugs increases as the virus spreads.
“I’m no doctor, but I do think I understand human nature well enough to realise the potential for another economic hit to growth from this source,” said Robert Carnell, chief economist for the Asia Pacific at Dutch bank ING, in a research note.
At least one analyst says investors should expect share prices to fall even further.
“Markets have priced too little in, in terms of the spreading of this virus across multiple Asian cities from Wuhan and millions of travellers across China for [Chinese New Year] is likely to worsen the situation,” Margaret Yang, an analyst at CMC Markets in Singapore, said in an emailed note.
“Information asymmetry underscores the possibility that official figures of the number of patients might have been under-reported for social stability reasons,” Yang said.
The SARS outbreak started in China in early 2003, but spread rapidly as far as the US [December 30, 2003: GN/FA/Reuters]
Back in 2003, over a period of a few months, more than 8,000 people fell ill because of the SARS virus, mainly across Asia, with some cases reported as far away as Europe and the United States, killing more than 770 people in total, according to data compiled by the World Health Organization.
As people stopped going to restaurants and shops, and curtailed their travel plans, industries such as leisure, tourism and transport across Asia suffered.
The Asian Development Bank estimates that the region’s worst-affected economies – mainland China, Hong Kong, Singapore and Taiwan – experienced economic losses totalling $13bn, shaving between half and a whole percentage point off the region’s gross domestic product.
But the region bounced back pretty swiftly.
“These losses, however, did not affect any of these economies for more than a couple of quarters, and even the most heavily affected countries started recovering by [the third quarter of] 2003,” the bank says in a report published in October on the economic impact of SARS.
Hong Kong’s open, service-oriented economy, however, suffered more than most places in Asia.
Its gross domestic product – the main measure of size of an economy – shrank by 0.5 percent in the second quarter, before recovering over the next two quarters and growing by 3.1 percent for 2003 as a whole.
More pain, no gain?
But there are some big differences between the state of Hong Kong’s economy then, and now.
In 2003, its main trading partner – mainland China – was growing at an annual pace of about 10 percent. In fact, part of Hong Kong’s economic policy response to the SARS epidemic was to open itself up further to mainland China to take advantage of growth across the border. One example: It started allowing individual mainland Chinese tourists to visit the territory, rather than confining them to tour groups.
But today, the mainland’s annual growth rate is about six percent, its slowest pace in nearly 30 years. China’s trade war with the US has affected not only the mainland, but Hong Kong as well, with its heavy reliance on its role as an important transshipment hub between mainland China and the rest of the world.
Medical staff in Wuhan, Hubei province, China, where the latest viral outbreak started [January 20: EPA]
And Hong Kong was already in a recession before the latest viral outbreak, its economy pummelled by months of violent anti-government protests triggered by anger at a now-withdrawn bill that would have allowed for suspects to be extradited to the mainland.
SARS and the latest viral outbreak seem to share a common trait: They appear to affect people who have already been weakened by either old age or other conditions.
With that in mind, the prognosis for Hong Kong’s ailing economy for the months ahead – as it suffers under the perfect storm of a plunge in tourist arrivals due to protests and now a viral outbreak, combined with the effects of the US-China trade war – could spell yet more pain.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
