The markets have begun to pop champagne over global economic
recovery, but the elephant lurking in the room -- swine flu --
could trample those green shoots.
Spotted just four months ago, the new A(H1N1) influenza virus
spread by June into a global pandemic and experts warn it could
take a toll on productivity and financial systems, depending on the
severity of outbreaks.
About 1 800 people have died in the pandemic that now affects
more than 170 countries, according to the World Health
Though the number of cases reported to WHO has topped 182 000,
the United Nations health watchdog cautions the real number is
higher because countries are no longer required to test and report
Health officials are gearing up for resurgence in cases as the
northern hemisphere enters winter. So far swine flu infections
generally have been relatively mild, with typical flu symptoms that
last about a week.
However, the pandemic virus could mutate into a more deadly
form. Officials are projecting a shortfall in vaccines being rushed
to market in hopes of warding off a potential global health
Severity of impact hard to measure
Faced with the unpredictable nature of flu viruses, economists
say it is difficult to assess the impact of swine flu on the
delicate global economic recovery taking shape amid the worst world
recession since World War II.
Will the elephant leave the party quietly or run amok?
"As the severity of A(H1N1) is so far not severe, we would not
expect the magnitude of the shock to the economy to be large
relative to GDP (gross domestic product)," said Simonetta Nardin, a
spokeswoman at the International Monetary Fund.
"The main threat to financial stability is the risk that high
levels of absenteeism could lead to breakdowns in the functioning
of key financial systems," she said.
School closures would exacerbate absenteeism, further reducing
Nardin said that the effects of swine flu on global financial
stability and the world economy would be covered in future updates
of the IMF's Global Financial Stability Report and World Economic
Outlook (WEO), "as warranted by events."
Swine flu will cost global economy trillions
World Bank experts have estimated the potential economic costs
of a global influenza pandemic could range from 0.7% to 4.8
percent of global GDP depending on the severity of the outbreak.
The lower estimate was benchmarked on the Hong Kong flu of
1968-1969, while the upper bound was based on the devastating
1918-1919 Spanish flu, which infected an estimated one third of the
world's population and caused 50 million deaths.
Based on the IMF estimate of 2009 global GDP of 54.863 trillion
dollars, the swine flu pandemic, using the World Bank simulation,
could cost the global economy between 384 billion dollars and 2.633
"In the case of a serious flu, 70% of the overall
economic cost would come from absenteeism and efforts to avoid
infection," World Bank experts wrote in the Global Development
Finance report released in June.
"Generally speaking, developing countries would be hardest hit,
because higher population densities, relatively weak health care
systems, and poverty accentuate the economic impacts in some
The swine flu virus was first identified in California in late
April and officials linked the new virus to an outbreak of
illnesses in Mexico, which has borne the brunt of the economic costs of the
epidemic, particularly in the transportation and tourism sectors.
"While we expect these effects to dissipate quickly following
the peak of the epidemic in May, we estimate that the swine flu
epidemic will have lowered GDP growth in Mexico on the order of 0.5
to 1.0% in 2009," an IMF official said, on condition of
"These effects are already factored into our baseline outlook
for growth in Mexico of negative 7.3% in 2009, as released
in the July 2009 WEO," the official said. – (Sapa, August 2009)
WHO predicts swine flu explosion
Swine flu hotline launched