Report: Flu pandemic could cut economic output 3-9%

Jun 28, 2006 (CIDRAP News) – An influenza pandemic would reduce the gross domestic products of the world's major economies by amounts ranging from 9% in China to 3% in Canada, according to a recent report by the Australian Bureau of Agricultural and Resource Economics (ABARE).

In its analysis, ABARE assumed a medium-scale pandemic with a global death toll of around 80 million. The authors also assumed that healthy adults aged 19 to 45 would be particularly hard hit, as was true in the severe flu pandemic of 1918-19.

Quarantines, sickness, and death will be the major factors that reduce worker productivity and affect economies, according to ABARE, an Australian government research agency. Consumer confidence and investment also would suffer.

Industries such as transportation and production would be most acutely affected by border closures. However, a pandemic could spur the growth of some other sectors, such as health care, communications, and information technology.

Predicted decreases in gross domestic product are as follows: China, 8.7%; Southeast Asia, 7.1%, Australia, 6.8%; Republic of Korea, 6.7%; Japan, 6.1%; United States, 3.5%; European Union, 3.7% and Canada, 3%.

The report predicts that the economic impact on developing countries will be even larger than the effect on developed countries, because mortality rates in developing countries are expected to be higher.

Fear of the disease could cause panic and chaos that might disrupt the food supply, basic services, financial services, and public order. "Under such circumstances, the economic costs imposed by an outbreak would be greater than what is estimated in this study," the authors note.

Regardless of where the initial outbreak occurs, all countries are vulnerable to a pandemic, the authors wrote.

"It is more efficient for Australia and other countries to continue to be active in international efforts aimed at eradicating, preventing or containing the influenza virus at its source before it reaches international boundaries," they concluded. "A collective approach in dealing with the spread of the virus may be more effective and efficient than individual or unilateral efforts."

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