Occupy Central's impact on growth likely less severe than SARS

The real damage may not be economic.

To assess the consequences of Occupy Central on Hong Kong's growth, it has been noted that the SARs episode provides a rough gauge on how growth may be impacted in an extreme scenario.

According to a research note from DBS, in 2Q03, GDP fell by 0.6% YoY but staged a broad-based recovery in 3Q03.

The short-term impact of Occupy Central is likely to be less severe than SARS as most parts of the economy are still functioning amid mild disruptions.

Assuming the movement ends within October and travel warnings and restrictions are removed soon afterwards, 4Q14 GDP growth is likely to fall from about 2.0% to 0%, and full-year GDP growth is expected to fall to 1.6%-2.1% from pre-demonstration projections of 2.6%.

Notably, the report also said that the real damage from Occupy Central may not be economic. The costs to social cohesion are real but not quantifiable.