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Ciptapangan Visitor
Severe Flu Pandemic May Cost Up to $2 Trillion, World Bank Says
posted by admin on 30/06/06

Since January at least 54 people have died from H5N1

June 29 (Bloomberg) -- A flu outbreak killing 70 million people worldwide may cause global economic losses of as much as $2 trillion, a World Bank official said.

A slump in tourism, transportation and retail sales, as well as workplace absenteeism and lower productivity, may cause the world economy to shrink by 3.1 percent, said Milan Brahmbhatt, a lead adviser in the East Asia region, citing a study by the Washington-based World Bank. The study predicted a surge in corporate bankruptcies in companies with a high level of debt to equity, such as airlines.

``It goes almost without saying that these broad scenarios are not meant to be forecasts,'' Brahmbhatt said in a speech prepared for the First International Conference on Avian Influenza in Humans, which starts today in Paris. ``They are only exercises to help think through the various channels of impact and possible orders of magnitude.''

The Bank, which funds projects to alleviate poverty, is working with developing countries to improve hospitals and laboratories to bolster disease surveillance and management of bird flu. Human fatalities from the H5N1 avian influenza strain have almost tripled this year, providing more chances for the virus to mutate into a lethal pandemic form.

Since January at least 54 people have died from H5N1 as the virus spread in wild birds and domestic poultry across Asia, Europe and Africa. That compares with 19 fatalities in the first six months of 2005. In the past three years, at least 130 of the 228 people known to have been infected with H5N1 have died, according to the World Health Organization.

`Greater Costs'

``As these outbreaks continue and spread to new regions, they also increase the probability of a second stage, with human-to-human transmission and a global influenza pandemic, with enormously greater costs on a world scale,'' Brahmbhatt said.

A pandemic can start when a novel influenza A-type virus, to which almost no one has natural immunity, emerges and begins spreading. Experts believe that a pandemic in 1918, which may have killed as many as 50 million people, began when an avian flu virus jumped to people from birds.

The most immediate and largest economic impact of a pandemic might arise from the uncoordinated efforts of people to avoid becoming infected, not from actual death or sickness, according to Brahmbhatt.

SARS

During an outbreak of severe acute respiratory syndrome, or SARS, three years ago people tried to avoid infection by minimizing face-to-face interactions, causing a slump in demand for services such as tourism, mass transportation, hotels and restaurants. SARS infected more than 8,000 people between 2002 and 2003, killing 774.

The World Bank study assumes 20 percent declines in demand for tourism, transportation and other key services, which reduce global GDP by about 2 percent. The economic losses could range from $1.25 trillion to $2 trillion, according to the report.

Besides the immediate costs of disruption, a severe global flu pandemic could slash the size and productivity of the world labor force because of illness and death. The effect of the disease on the labor force would depend on factors including the virulence and spread of the disease and its impact on different age groups, Brahmbhatt said.

The Bank's scenario of a severe pandemic assumes about 35 percent of people worldwide would be infected. Of those, 3 percent, or about 70 million people, may die.

``There are economic losses due to the enormous morbidity typically associated with influenza, leading to absenteeism, school closing, declining productivity and crowded hospital emergency rooms,'' Brahmbhatt said.

Businesses that are the most resilient to volatility are the ones likely to suffer the least financial damage, he added. ``It would be firms with strong balance sheets and capitalization that are more likely to survive steep downturns in demand and cash flow that could last from 6 months up to 2 years,'' Brahmbhatt said.

To contact the reporter on this story:
Jason Gale in Paris at j.gale@bloomberg.net;
Kristen Hallam in Paris at khallam@bloomberg.net

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