Business | Economy
World economy at risk from H1N1
Alarming costs of the virus stand to exacerbate global recession.
- By Jumana Al Tamimi, Associate Editor
- Published: 22:43 June 27, 2009
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Drugmakers reap huge profits from flu
Drugmakers reap huge profits from flu fears
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Local pharmacies grappling with orders
Local pharmacies grappling with orders
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Illness found in definition
Illness found in definition
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Pandemic profits
Pandemic profits
Uncertain of the shocking global economic cost of H1N1? Ask Mexico.
When the authorities there announced a five-day suspension of all "non-essential" activities around the country shortly after the confirmation of the first case of flu on April 2, the cost was as high as $57 million (Dh209 million) per day, according to government estimates.
The national currency, the peso, fell four per cent against the dollar; the local stock market fell three per cent; and all hopes of a profitable tourism season were dashed.
So far, the number of reported cases has reached 59,814 from dozens of countries around the world, according to the World Health Organisation.
Within the several weeks since the confirmation of flu cases, signs of economic impact appeared.
Tourism, and airline stocks plunged and oil prices slid. The World Bank estimated last year that a flu pandemic could cost the global economy $3 trillion.
What increases the risks of big losses is the fact H1N1 started spreading at a time when the global economy was already under pressure from the international financial crisis started in the second half of last year.
The financial crisis has deeply hurt international trade, and now the H1N1 virus is expected to futher harm the already low level.
All countries across the world will be affected, Cairo-based economic expert Ahmad Al Najar said.
"The countries that are more integrated in global economy will be affected more than the countries that are less integrated," Al Najar told Gulf News.
"A mild scenario would cost the global economy about $360 billion and an ultra scenario up to $4 trillion within the year of the outbreak," Warwick McKibbin, a global economy expert, was quoted as saying by the monthly economic magazine Executive.
Al Najar explained that the range of losses depends on whether the borders between some of the countries with cases of the influenza will be closed or not, and whether the precautionary measures will be limited to warnings. In the case of the latter, the losses will be minimal.
"Simply because the total amount of international trade of services and goods stand at around $16 trillion, after it decreased because of the financial crisis," Al Najar said.
The Arab region is not an exception.
However, the exporting countries of goods other than foodstuffs and services will be affected more because of the influenza, while the oil and gas exporters will only start to feel the impact when the demand for its exports starts to decline because of the negative economic situation in the importing countries.
This, Al Najar explained, might lead to lower oil prices.
Meanwhile, some economists say the scare will have a bigger impact on stock markets than on the real economy.
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