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,

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 signific

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. This caused a 0.25 percentage points from annual GDP growth. Most of the impact was felt in the short-run. Growth in each of the second and third quarters of 2003 was reduced by 0.50 percentage points.

Concerns about retail spending have been prompted by anecdotal reports of reduced traffic in various shopping areas and restaurants in the Toronto area. This appears to have been particularly pronounced for those establishments with perceived connections to China and Southeast Asia because of the high, and the initial, incidence of the SARS virus in this region. Other retail outlets have also been affected by an increased hesitancy by the general population to venture out into public areas. Retail spending in the Toronto area is reduced by about 2% in most areas of consumer expenditure. The categories lowered are ones where there is scope for discretionary spending to be delayed. For example, expenditure on clothing and furniture have been reduced the full 2% though spending on shelter has been left unchanged. Thus, though consumer spending represents about 60% of overall GDP, less than half of it would b

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