The SARS virus was contracted by a significant number of people both globally and in Canada with the Toronto area particularly affected. S.A.R.S has caused falling tourism, declining retail sales, and individuals going into quarantine, there are clear indications of a negative impact on economic activity. This negative hit has also resulted in a deterioration in the fiscal situation of all levels of government.
There are four main channels, in descending order of importance, through which SARS has affected the Canadian economy:.
1. Reduced travel for business and leisure, .
2. Lower retail spending, .
3. Weaker exports to other affected areas primarily in Southeast Asia, and .
4. Reduced production from individuals in quarantine. .
This essay examines each one of these components and, shows its impact on the economy. .
The reduction in travel for business and leisure was the largest source of economic impact. This was largely concentrated in the Toronto area with a moderate spillover effect into the rest of Canada. The reduced spending on travel was due to the World Health Organization claiming Toronto to be unsafe to travel to. This warning was in affect for many weeks and caused a significant amount of people to avoid Toronto. The decline in spending is unlikely to be quickly reversed because of the forward planning often required for this activity, especially for leisure travel (e.g. family vacations). Business travel could bounce back more quickly though some component will be permanently lost (e.g. conventions). .
Foreign visitors spent $17.8 billion on both business and leisure travel in Canada in 2002 (of which an estimated one-fifth was spent in Toronto). The amount spent by foreign tourists in Canada is equivalent to 1.6% of the value of Canada's gross domestic product. With the W.H.O warning, there was an estimated 50% plunge in foreign visits to Toronto and a 10% reduction in foreign spending elsewhere in Canada.