As the number of SARS infections in China continues to wane, economists have begun to revise up the 2003 economic-growth forecasts that were cut at the height of the health crisis.

Citigroup Global Markets and Lehman Brothers on Tuesday upgraded their 2003 forecasts, saying that severe acute respiratory syndrome has caused less harm to China's economy than had been initially expected.

They join Morgan Stanley, which last week raised its forecast for China's gross domestic product growth this year to 7.5% from 6.5%.

All three upgrades were announced before the World Health Organization Tuesday lifted its travel advisory for Beijing, the last SARS-hit city to be removed from the warning list.

China's government never officially revised its target of around 7% growth - slightly slower than the 8% pace in 2002 - contained in its 2003 social and economic plan, after the SARS outbreak.

Even with these upgrades by investment banks, China's economic growth is still expected to slow sharply from the 9.9% year-on-year rate in the first quarter of this year.

Citigroup China economist Yiping Huang predicts China's economy will grow 7.5% on year in 2003, compared with the bank's mid-SARS forecast of 6.5% growth.

Mr. Huang said initial predictions were based on Chinese government taking between three to six months to bring the epidemic under control.

"The Chinese government was able to control SARS faster than we expected," he said.

Mr. Huang also said foreign direct investment and state sector spending was surprisingly strong in April and May.

The positive impact of the U.S. dollar's depreciation on China's exports due to the yuan's tightly managed float was also underestimated, he said in a client note.

Lehman Brothers senior economist Robert Subbaraman said the long-term damage to China's economy from SARS is likely to be negligible. Mr. Subbaraman upgraded Lehman's 2003 GDP forecast to about 8% on year from the 7.3% forecast made during the outbreak.

Mr. Subbaraman said that while China had the most cases of SARS of any country and region, it also has the world's largest population, so the infection rate was actually quite low.

"In addition, China's economy has been cushioned from the weakness in consumption by the resilience of other key expenditure components," he said, referring to fixed-asset investment and strong export growth in April and May.

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