Singapore, Hong Kong face brunt of fiscal risk
Peter Alford, Tokyo correspondent | May 02, 2009
Article from:
The Australian
SINGAPORE and Hong Kong, two of the world's most prosperous cities, are at far greater economic risk from a swine flu pandemic than poor African and Asian countries, says a study by investment bank Nomura Holdings.
Singapore rates -438 and Hong Kong -427 on Nomura's "composite pandemic flu exposure index", way below the next most exposed countries, Bangladesh (-87) and Madagascar (-83).
Australia, at 90 on the index, is ranked among the 20 economies at least economic risk from the virus, reports Rob Subbaraman, Nomura's Asia chief economist.
The US, at 187, is least exposed, followed by Japan (167), which yesterday reacted with relief to news that the country's first suspected case of deadly swine flu, a 17-year-old high school student who recently visited Canada, had tested negative for the virus.
The youth returned last weekend with a party of 120 students from the Canadian province of British Columbia, which has reported 11 cases of H1N1 infection.
Nomura's index of 97 countries is a composite measure of exports as a percentage of gross domestic product, the importance of people-intensive service industries, population densities, life expectancies and health services.
The study concludes that two of the world's most vigorous, wealthy and international cities have a much greater risk of economic damage from a full-blown pandemic than the developing or poor African and Asian countries that otherwise are the most exposed. The risk has been demonstrated before. Hong Kong and Singapore were among the economies worst hit by the SARS outbreak of 2003.
Hong Kong last night announced its first confirmed case of swine flu, a Mexican man, who arrived via Shanghai, and quarantined guests and staff at the hotel where he had stayed.
Singapore is yet to confirm a case but, as international trading and tourism hubs, both cities have been badly damaged by the global economic collapse.
In the first three months of this year, Singapore's GDP plummeted at an annualised rate of 19.7per cent. Financial Secretary John Tsang has warned Hong Kong's economy will shrink 2-3 per cent this year, the city's first contraction since the 1997-98 Asian financial crisis.
The combination of factors setting Hong Kong and Singapore apart on the risk scale are economic openness, reliance on trade and tourism, vulnerability to capital flight - foreign investors being able easily to withdraw their investments - and population densities.
The most significant damage from a flu pandemic, Mr Subbaraman writes, comes less from illness and deaths than from "demand-side effects" - reduced travel and trade and people shunning public places, non-essential shopping and eating out.
A recent World Bank study showed 60 per cent of the economic cost of the 1918-19 Spanish flu pandemic came from people's efforts to avoid infection, compared with 28 per cent from illness and absenteeism and only 12 per cent from deaths.
Peter Alford, Tokyo correspondent | May 02, 2009
Article from:
The Australian
SINGAPORE and Hong Kong, two of the world's most prosperous cities, are at far greater economic risk from a swine flu pandemic than poor African and Asian countries, says a study by investment bank Nomura Holdings.
Singapore rates -438 and Hong Kong -427 on Nomura's "composite pandemic flu exposure index", way below the next most exposed countries, Bangladesh (-87) and Madagascar (-83).
Australia, at 90 on the index, is ranked among the 20 economies at least economic risk from the virus, reports Rob Subbaraman, Nomura's Asia chief economist.
The US, at 187, is least exposed, followed by Japan (167), which yesterday reacted with relief to news that the country's first suspected case of deadly swine flu, a 17-year-old high school student who recently visited Canada, had tested negative for the virus.
The youth returned last weekend with a party of 120 students from the Canadian province of British Columbia, which has reported 11 cases of H1N1 infection.
Nomura's index of 97 countries is a composite measure of exports as a percentage of gross domestic product, the importance of people-intensive service industries, population densities, life expectancies and health services.
The study concludes that two of the world's most vigorous, wealthy and international cities have a much greater risk of economic damage from a full-blown pandemic than the developing or poor African and Asian countries that otherwise are the most exposed. The risk has been demonstrated before. Hong Kong and Singapore were among the economies worst hit by the SARS outbreak of 2003.
Hong Kong last night announced its first confirmed case of swine flu, a Mexican man, who arrived via Shanghai, and quarantined guests and staff at the hotel where he had stayed.
Singapore is yet to confirm a case but, as international trading and tourism hubs, both cities have been badly damaged by the global economic collapse.
In the first three months of this year, Singapore's GDP plummeted at an annualised rate of 19.7per cent. Financial Secretary John Tsang has warned Hong Kong's economy will shrink 2-3 per cent this year, the city's first contraction since the 1997-98 Asian financial crisis.
The combination of factors setting Hong Kong and Singapore apart on the risk scale are economic openness, reliance on trade and tourism, vulnerability to capital flight - foreign investors being able easily to withdraw their investments - and population densities.
The most significant damage from a flu pandemic, Mr Subbaraman writes, comes less from illness and deaths than from "demand-side effects" - reduced travel and trade and people shunning public places, non-essential shopping and eating out.
A recent World Bank study showed 60 per cent of the economic cost of the 1918-19 Spanish flu pandemic came from people's efforts to avoid infection, compared with 28 per cent from illness and absenteeism and only 12 per cent from deaths.
