Wednesday, June 24, 2009

World Bank on Potential Economic Impacts of Flu Pandemic

Jason Gale, Bloomberg contributor, summarizes a World Bank report on the potential economic implications of the current influenza pandemic.

"June 23 (Bloomberg) -- The pandemic sparked by swine flu may be as severe as the Hong Kong flu of 1968-69 that cost an estimated 0.7 percent of global gross domestic product, according to the World Bank.

The new H1N1 flu strain might reduce second-quarter GDP by as much as 2.2 percent in Mexico if disruptions to businesses, including those in the restaurant, hotel and transportation industries, persist in the Mexico City region, the Washington- based lender said.

Transmission of the bug is likely to accelerate as the flu season begins in the Southern Hemisphere and again when it returns in the Northern Hemisphere, the bank said in a report released yesterday. As many as 1.5 million people die in a normal flu season worldwide, and even a mild new flu might add another 1.4 million deaths, the report said.

'Even if it does not mutate into a more deadly form, a second wave of the flu in low-income countries could have serious consequences -- given poor countries’ limited capacity to monitor and treat an outbreak and the higher incidence of chronic disease within their populations,' the bank said.

More than 52,000 cases of swine flu have been reported by at least 90 countries, the World Health Organization said yesterday. In most cases the virus causes little more than a fever and cough. Still, governments have ordered millions of doses of vaccine to protect against the scourge.

Bird Flu

WHO is watching for any sign the disease is worsening as the germ circulates during the Southern Hemisphere’s flu season, creating opportunities for its genes to mutate or combine with those of other viruses, including the H5N1 bird flu strain that’s lethal in three of every five reported cases.

The new virus, which has genes from strains that have sickened humans, pigs and birds, has caused 231 deaths, Geneva- based WHO said. Almost half of them were in Mexico, where the economic costs of the epidemic have been concentrated, particularly in the nation’s transport industry, according to the World Bank report.

The bank, formed after World War II to fund health and development projects in poor countries, said that air travel to and from Mexico has declined 80 percent since the outbreak, and hotels in popular resorts have reported vacancy rates as high as 80 percent.

Overall, tourism revenue is down about 43 percent, increasing Mexico’s external financing gap because tourism is an important source of foreign currency.

4.8% of GDP

Unlike seasonal flu, from which the elderly suffer the most death and disease, the new bug is preferentially targeting the young and causing potentially fatal complications in otherwise healthy people aged 30 to 50, pregnant women and those with asthma, diabetes and obesity.
Simulations of the potential economic and human costs of a pandemic based on avian flu that was undertaken for a 2006 report suggested that the costs of a global outbreak could range from 0.7 percent to 4.8 percent of global GDP, depending on the severity of the outbreak, the lender said.
The lower estimate was based on the Hong Kong influenza pandemic of 1968-69, while the upper bound was benchmarked on the 1918-19 Spanish flu. In the case of a serious flu, 70 percent of the overall economic cost would come from absenteeism and efforts to avoid infection, according to yesterday’s report.

'Developing countries would be hardest hit because higher population densities, relatively weak health care systems and poverty accentuate the economic impacts in some countries,' it said. "

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