Business | Opinion
When economies get the flu
If the H1N1 pandemic stays under control, countries are expected to lose $330b in the first year, but the figure may soar to $4.4tr if the situation worsens.
- By Jumana Al Tamimi, Associate Editor
- Published: 23:01 July 27, 2009
- Image Credit: Nino Jose Heredia/Gulf News
Fear of the H1N1 flu epidemic is growing around the globe. Anxiety has gripped many people, not only among those who travel a lot but also those who are involved in trade and hospitality business. And their concerns are legitimate. If the flu pandemic spreads further, it will affect the global economy, according to some experts.
The worst affected would be sectors which involve human-to-human contact. Moreover developing countries will bear the brunt as their economies are likely to suffer and hence incur more losses.
Until some sort of a global coordination is reached, experts believe that developing countries will have to spend a disproportionate amount to prevent losses due to the H1N1 virus. In other words, the wealth of nations will define their ability to respond to the spread of the flu pandemic.
"Without a coordinated global response the costs will be directly related to the number of cases as well as the capacity of countries to respond in a way that induces confidence," said Warwick McKibbin, an Australian Professor of Economics and a Non-Resident Senior Fellow at Washington-based Brookings Institute.
"Countries with high exposure [to H1N1] due to geographic factors such as population density, those with weak health systems and poor government credibility, mostly in developing countries are most at risk," he told Gulf News.
So far, more than 700 people have died due to the H1N1 pandemic and tens of thousands have contracted the virus. Deaths were reported in both developed and developing countries.
As health experts are expressing their concern, the virus has spread faster than anticipated earlier, says McKibbin, who co-authored a report on four scenarios based on global losses in case of a pandemic outbreak. The study was based on the three pandemic outbreaks in the 20th century.
In case of a mild pandemic scenario, the world economy is expected to suffer $330 billion (Dh1.1 trillion) in the first year. In the worst scenario, the loss is expected to reach $4.4 trillion in the first year.
Whether mild or severe, "these results were conservative", McKibbin said, explaining that it is "difficult" to estimate the actual degree of panic that might occur in a severe outbreak.
Meanwhile, some sectors are being affected by the H1N1 virus more than others. Fields that "rely on human-to-human contact such as service industries, restaurants, travel, tourism" are likely to suffer more, McKibbin said. This is because people will avoid these sectors. With a cut in consumer spending, these sectors will report less profit.
Meanwhile, as the developments related to the virus are becoming daily news in the media, some believe that the fears about H1N1 are exaggerated. The reason is that flu can prove fatal only if the immune system of the affected person is weak. However, others believe that the fear of a severe outbreak is not an exaggeration.
Most countries are taking steps to restrict the spread of H1N1.
In the region, the Arab health ministers have recently announced measures to protect its citizens and prevent the virus from spreading. One of the measures, which was announced on July 22, is to restrict certain groups of people, over 65 and children under 12, from performing this year's Haj in Saudi Arabia. Also included in the banned list are those suffering from chronic illness.
Recently, some countries stopped the same groups from travelling to Saudi Arabia to perform Ummra, which can be performed at any time, but usually gains momentum during the holy month of Ramadan, which is expected to start by August 21.
Haj is considered the world's biggest religious gathering, where nearly 2 million pilgrims from all over the world gather for a specific number of days. This year it is expected to take place in late November.
Some governments have also cancelled popular events and festivals where huge crowds congregate.
In some countries, including Egypt and Chile, the authorities have cancelled the celebrations of popular festivals that usually draw tens of thousands of people.
China is quarantining any visitor suspected of having a fever.
Summer vacations could be extended in many parts of the world.
In Switzerland, supermarket chains are considering requiring customers to disinfect their hands and wear a face mask as they enter the store.
When asked to comment on such measures, McKibbin replied that different countries have dealt with the preparedness in different ways.
But, "the most important long term and sustainable policy is to reduce poverty in poor countries and to improve health systems in these economies to minimise the probability of an outbreak in the first place," he said.
H1N1 could constitute a good case to use "antiviral stockpiles to directly attack an outbreak at source rather than to wait until the outbreak reaches the borders of rich countries". "Neither of these strategies has been adequately invested in at the global level," McKibbin added.
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