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The mysterious SARS virus that has spread far beyond its Asian origins is also having a far-flung economic impact. In Israel's case, the most affected region - Singapore, China and Hong Kong - is the destination of 3.9 percent of Israel's exports, and imports from there account for 5.6 percent of the country's total imports.

First among those feeling the effects seems to be the diamond industry. Almost one-fifth of the $5.2 billion in gems exported by Israel last year went to the Far East, and many Israeli merchants set up shop in Hong Kong, regarded as the gateway to the booming Chinese market.

As luxury goods, diamonds are likely to be affected not only by the massive drop in travel in the Far East, but also psychologically, as demand for precious stones tails off in times of uncertainty. The industry saw this clearly in the aftermath of 9/11.

In all, Israel exported $2.3 billion of goods to Southeast Asia last year - 12 percent of its total exports. Almost one-third of this went to the three places most hit by severe acute respiratory syndrome - Singapore, Hong Kong and China.

The outcome will depend on the time factor. "If the episode ends within a few months," explains Shauly Katznelson of the Israeli Export Institute, "there will be almost no effect on Israel's industrial imports and exports, excluding diamonds." Katznelson bases his forecast on the marginal effect of the Far East's problems on Israel. Moreover, the World Bank has said that the Asian economy would see a slowdown in growth - but not grind to a halt - as a result of SARS, he noted.

The Federation of Israeli Chambers of Commerce advised importers not to travel to the Far East, following advisories from the World Health Organization, and indeed many who planned to go to China have canceled.

Silver lining

A senior Israeli investment manager said yesterday that following the September 11 terror attacks, he raced to buy shares in security firms. "Many others bought security shares at the same time," he claimed, "and we all profited." In other words, some see a silver lining in any calamity.

The same manager continued that an opportunity exists now for those offering goods and services that may be affected by SARS in the Far East, in particular, companies that have manufacturing outlets in places other than Asia.

Israel's textile industry is based on imports from the Far East, much of it from China, which exports around $300 million of clothing and textiles to Israel every year. A fear that the average consumer would link SARS and the clothes on sale here failed to materialize, but nevertheless, Israeli companies have had to meet their Asian counterparts either here or in Europe as travel to the region has all but dried up.

Fashion companies such as Castro, Fox and ML (formerly Matim Li) report business as usual, though more use has been made of video-conferencing and e-mail. "The Chinese themselves told us not to come at first," said Avi Malka, CEO of ML, "because they were hysterical, but now they are much calmer."