Possible Economic Impact of Bird Flu Mutation
Possible Economic Impact of Bird Flu Mutation
A human influenza pandemic could cost the world's richest nations $550 billion, according to the World Bank (Report November 6th 2005).
Previous studies on flu pandemics have suggested any new outbreak could kill between 100,000 and 200,000 people in the United States alone, which could translate into economic losses for the country of between $100 billion and $200 billion. This estimate includes 700,000 or more hospital admissions, up to 40 million outpatient visits and 50 million additional illnesses. However, as we have seen above, the worst-case US government estimate is of up to 1.9 million deaths..
The World Bank has extrapolated from the US figure based on only 100,000 to 200,000 deaths, to all high-income countries, with a present-value total loss of $550 billion. The loss for the world would be significantly larger, because of the impact in the developing world.
The Asian Development Bank warned that the economic damage in the East Asia region from a pandemic could be as high as $282bn (¡Ì158bn), assuming 20% of the region's population falls ill.
A two percent loss of global gross domestic product during a pandemic -- like that caused by SARS in East Asia during the second quarter of 2003 -- would represent about $200 billion in losses in one quarter or $800 billion in a year.
The US. government has published its own report on the possible impact of bird flu mutations on the US economy. The health costs alone of a moderately bad pandemic, not including disruption to the economy, are estimated to be $181 billion. This figure describes a pandemic similar to that of 1968, which killed about 34,000 Americans, a figure close to the annual average of flu deaths now in a larger U.S. population. Yet the 1918 pandemic killed 500,000 Americans. Economic disruption, through travel limitations and a sharp rise in sick days, would be enormous. The US report predicts that a worst-case avian flu pandemic could kill from 209,000 to 1.9 million Americans. Outside estimates of a global toll have ranged as high as 50 million or 60 million.
Our world is very open to disruption by lethal mutant viruses because we still have no antiviral drugs that are as effective as penicillin and other antibiotics against bacteria.
The economic impact of an uncontrolled pandemic could be devastating to the global economy as a whole, if death rates are high, and the effects could last more than a year. Some kinds of business such as conferencing and tourism could be severely affected in some parts of the world at an early stage.
Impact is likely to be greatest on all activities which cause people to gather together, on travel and tourism, but also on parts of the food and manufacturing industries as well as other business sectors. It all depends on how many cases there are of a human form of the infection, where they are, what the death rate is and how infectious it seems to be, and what the public reaction is.
Some countries such as America have already indicated that they may close borders if a dangerous super-flu pandemic seems to be starting.
As we saw with SARS, there would only need to be a few thousand cases with a 10% mortality (bird flu at present kills 50% who get it) to cause major business and leisure disruption in different parts of the world. The cost to the regional economy of Sars was been estimated to be many billions of dollars. Despite this, in early November 2005 markets had yet to price Bird Flu risk into their forecasts and risk assessments.
The greatest factor is likely to be emotional: worries, uncertainty, fear, loss of confidence, with postponement of expenditure until the situation is more certain.
The British government by October 2005 was working on the basis of a million infections in the UK with 50,000 deaths - four times the normal annual death toll from flu - but with a contingency plan in case the death toll was more than ten times as high.
So long as business and consumers believe that a pandemic is just a worse version of the usual flu epidemic, it is likely that impact will be relatively small in the short term. However, playing down the risk could contribute to loss of control by making it difficult to justify radical control measures.
Government leaders may be faced with difficult choices: give clear, strong warnings and get effective control, at the risk of worrying millions of people and wrecking some industries - or play down the threat and just hope for the best.
If death rates are high in the first few thousands infected, it is likely that members of the public will start to change behaviour regardless of what governments say, and leaders may come under huge pressure to implement emergency measures such as closure of schools in some areas, and restriction of all unnecessary travel. Some scenarios could include closure of some airports. Indeed, Reuters has reported that the Chinese government will close all borders if there are proven cases of person to person spread in China.
We could see some control measures introduced because of the need to reassure public opinion even where experts believe such measures will have little or zero effect. Air travel is a good example. In 1918 some 300-400 million became infected in a few months without a single aircraft being involved. A country could try to seal all borders and still find it has a major epidemic - perhaps from unrecognised infection that has already arrived, or from unpreventable movements of people. We can expect vigorous debate about what is appropriate to do.
With every week that passes, our world becomes slightly better defended, as governments refine their infection control plans, stockpiles grow of antivirals, more aggressive efforts are made to slaughter infected birds, and more bird handlers are vaccinated against ordinary flu (to reduce risk of getting both infections and triggering mutations).
If (or when) the human mutation occurs, it will be vital so slow down spread for as long as possible in the early stages, so that the virus can be analysed, treatments tested, and vaccine production started on a massive scale.