Technology research house Gartner Inc. said regional economies severely affected by the Severe Acute Respiratory Syndrome (SARS) epidemic could see weaker demand in the second quarter.

"A number of key markets, including Singapore, Hong Kong, Taiwan and China face challenging business conditions in the second quarter of 2003," said Matthew Boon, regional vice president for hardware and systems research.

"Thus we should expect that the second quarter could negate much of the first quarter gains.

"Many large organisations, particularly in the tourism, hospitality and services industries are looking closely at delaying capital expenditure programs."

The SARS epidemic broke out in the region in March, after having largely been restricted to southern China since November.

China, which has the world's highest SARS death toll and cases of infections but is the region's biggest server market, saw an eight percent jump in sales to 358.77 million dollars in the first quarter.

Sales in Taiwan, now the SARS hotspot, rose 5.5 percent to 81.06 million shares.

In Singapore, sales fell 5.3 percent to 55.86 million dollars and demand also shrank in Hong Kong, with sales dropping 9.4 percent to 46.3 million dollars.

The figures, which excluded Japan, showed total regional sales for the quarter were 1.12 billion dollars.

SPACE.WIRE