Will Asia’s SARS Lessons Help Economy Cope With Swine Flu?

Fear is running through the markets in Asia and rightfully so, as the swine flu is spreading and investors and consumers are on edge, since SARS is still fresh on many minds. Will exchange traded funds (ETFs) and the economy at large be able to withstand the misery?

Asia Pacific holiday tours were canceled shortly after the deadly virus was reported as an outbreak in Mexico. A series of government warnings were honored and airports from Indonesia to Australia tightened their screening of travelers, reports Jeremiah Marquez for The Los Angeles Times. The World Health Organization (WHO) raised its global alert level on Monday as infections cropped up in Europe. Asian countries, including South Korea and New Zealand, found suspected cases. In North America, the outbreak remains a little more under control for the time being.

Amid the recent economic conditions, any possible hope for a market recovery seem laid to rest as the outbreak of the swine flu has markets arrested and investors weary. This does not support consumerism at any level, and airlines, hotel companies and other travel-linked stocks took another hit.

Will the outbreak of a deadly virus known as SARS be a guide for Asia this time around?

Vidya Ranganathan for Reuters reports that in 2003, Asia was feeling the effects of the October 2002 Bali bombings, a tentative world recovery was under way from the bursting of the technology bubble and there was conflict in Iraq.

Today, other indirectly affected economic segments, such as job losses, income losses, and so on, may make it harder to pinpoint effects of the swine flu outbreak versus an already crumbling economy. SARS-affected economies experienced drops in retail sales growth in the order of 5% to 10% in early 2003. Overall growth was ironically helped by a simultaneous decline in imports and investment.

Meanwhile, China had implemented price controls upon SARS related drugs, tax-waivers for affected industry and and interest subsidies for tourism sectors.

• PowerShares BLDRS Asia 50 ADR Index Fund (ADRA): up 3.6% year-to-date; down 1.4% on Tuesday

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