Oct 17, 2008 (CIDRAP News) – An internal report prepared by the World Bank estimates that a severe influenza pandemic could kill 71 million people and cause a recession costing more than $3 trillion, Bloomberg News reported today.
The report says that in a severe pandemic, sagging tourism, transportation, retail sales, and productivity, coupled with worker absenteeism, could reduce global gross domestic product (GDP) by 4.8%, according to Bloomberg.
The new report increases the economic impact estimates made by the World Bank in June 2006. At that time the bank estimated GDP would drop by 3.1%, or about $2 trillion, according to Bloomberg. The story did not explain why the estimates have changed.
Bank officials estimate that a "mild" pandemic, similar to the Hong Kong flu of 1968-69, could kill 1.4 million people and reduce global GDP by 0.7% in the first year, Bloomberg reported.
The projection for a "moderate" pandemic like that of the Asian flu in 1957-58 is that it could cause 14.2 million deaths and reduce global economic activity by 2%, the story said.
The bank report also notes that some experts have estimated a death toll ranging from 180 million to 250 million in a severe pandemic.
World Bank predicts that changes in individual behavior, such as avoiding air travel, restaurants, and mass transportation, could account for 60% of the costs during a pandemic, the story said.
In regard to economic impact, "People's efforts to avoid infection are five times more important than mortality and more than twice as important as illness," Bloomberg quotes the report as saying. In the worst case, the authors estimate that air travel, tourism, restaurant business, and use of mass transit could drop 20% for the first year.
The World Bank's estimate of a 4.8% drop in GDP in a severe pandemic is slightly lower than some other estimates of the hit on the global and US economies. For example, researchers at Australian National University predicted that an "ultra" pandemic would slash global GDP by 5.5%.
In 2007, the health advocacy group Trust for America's Health estimated that US economic activity would shrink 5.5% in a 1918-like pandemic. And in 2005 the Congressional Budget Office projected that a pandemic would cut the US GDP by 5%.
The Bloomberg story, citing a United Nations official, also said world leaders will be asked to contribute about $500 million for avian flu control and pandemic preparedness when they meet Oct 24 to 26 in Egypt for the Sixth International Ministerial Conference on Avian and Pandemic Influenza.
In other developments, the British insurance market Lloyd's released a report on the possible effects of a pandemic on the insurance industry. The report says a pandemic on the scale of 1918's could reduce economic activity by anywhere from 1% to 10%.
"Economic impacts are likely to occur and a pandemic as severe as 1918 may lead to a global recession with reductions of between 1% and 10% of GDP," it states. "These may impact the general business environment."
The Lloyd's report also cautions against assuming that the 1918 pandemic necessarily represents the "worst case" event.
"1918 may not be a worst case," the report says. "It is certainly true that the 1918 event was extreme relative to other pandemics in history. However many published 'worst case' scenarios take 1918 as a base. There is a danger that we over optimise to this one scenario. There are other forms of pandemic than influenza, some have higher case mortality. Pandemic preparedness should consider a range of scenarios to ensure plans are appropriately flexible."
March 22, 2007, CIDRAP News story "Pandemic could cause deep, uneven recession, group predicts"