Sars weighs on Asia's economies. The WHO has advised travellers to avoid Hong Kong

BBC Last Updated:  Monday, 7 April, 2003, 14:23 GMT 15:23 UK

Retail sales in Hong Kong have fallen by 50% since the outbreak of the deadly pneumonia-type Sars virus, a retail group has said.

The Hong Kong Retail Management Association said it would take months for consumer confidence to recover, as shoppers continued to stay at home to avoid the illness that is so far believed to be responsible for 95 deaths worldwide.

The economic effects of the virus have been felt across Asia.

Firms in China have been issuing face masks to staff and disinfecting offices, and Singapore is to cut its economic growth target as its retail and tourism sectors continue to lose business because of Sars.

The tourism industry has been badly affected across the region.

Economists have also warned that Taiwan's trade figures may be hit by measures designed to prevent the spread of the illness that originated in China, Taiwan's largest market.

Staying at home

Investment banks have reduced their forecasts for economic growth in Hong Kong this year in light of the effects of Sars.

Tourism and retail sectors have been particularly badly affected as people avoid crowded areas in regions where incidents of the virus are high.

Yu Pang Chun, chairman of the Hong Kong Retail Management Association, has called on landlords to halve rents to merchants for three months to help soften the blow.

The Hong Kong Tourism Board said there was a 10% drop in visitors to the territory in the second half of March compared with the same period last year and many flights to the territory have been cancelled.

On Monday, one-quarter of the flights in and out of Hong Kong International Airport were ditched, and 17% of the scheduled flights for April are off the board.

Preventative measures

The World Health Organisation has advised travellers to avoid Hong Kong and the Chinese province of Guangdong.

Some workers have been issued with protective masks

Travel restrictions designed to prevent the spread of the virus are also resulting in companies losing business.

Hong Kong's watch industry has been forced out of a trade fair in Switzerland, owing to concerns over the illness.

The Federation of Hong Kong Watch Trades and Industries said the ban could lose its members HK$10bn ($1.3bn; £830m) worth of business and it plans to sue the organisers for damages.

But Hong Kong's Trade Development Council plans to press ahead with its April trade fairs despite concerns that turnout may be effected by the fear of Sars.

Fear of the virus is also hurting Australia's tourism sector with the country's Federal Tourism Minister describing Sars as the biggest threat to the industry.

Australia has launched a crisis plan to support tourism - one of the most lucrative sectors of the economy.

The plan targets travellers who can reach Australia without having to stopover in areas of Asia that are affected by Sars.

Employers' concerns

Foreign firms with operations in China have reviewed the safety of their staff following the death of a Finnish official with the China office of the International Labour Organisation from the Sars virus.

In the Shanghai offices of German home fittings company Kohler, staff have been issued with medicine and protective face masks and offices are disinfected regularly.

Also in Shanghai, Nestle has issued a memo to staff with information on the disease and has cancelled an event so staff do not have to fly in to the area.

German chemicals maker BASF has set up a special team to ensure staff are aware of the latest information on the disease and high demand from foreign executives has led Beijing United Family Hospital to arrange special presentations to explain prevention of Sars.

Costly

In Singapore the government has said it plans to cut its 2003 growth target of 2.5% as a result of the effects of the Sars virus.

There have been 101 suspected cases of Sars in Singapore, and six deaths.

Economists at BNP Paribas have cut their 2003 growth forecast for the country from 4% to 2.5% as they believe Singapore is likely to be one of countries worst hit by the virus.

Joseph Tan at Standard Chartered Bank believes the effect on tourism alone could cost the country $13m a week, and tourism accounts for over 7% of the country's GDP.

However the World Health Organisation has said that Singapore has nearly contained its epidemic after a dramatic slowdown in infections, although it said a clearer assessment would be made in another week or two.