Via Reuters.com: Flu-conomics: The next pandemic could trigger global recession. Excerpt from a long article:
A high body count is not the only meaningful number attached to a pandemic. The potential cost of a global outbreak of the flu or some other highly contagious disease, however ghoulish to calculate, is essential for government officials and business leaders to know. Only by putting a price tag on such an occurrence can they hope to establish what containing it is worth.
The financial damage by itself can be devastating. The expense of major epidemics is evident every time a health agency totes up the cost of treating infected people — the outlays for drugs, doctors' visits, and hospitalizations. But that spending is only the most obvious economic impact of an outbreak.
Consider the effect on international airlines. During the 2003 SARS (severe acute respiratory syndrome), which began in southern China and lasted about seven months, business and leisure travelers drastically cut back on flying. Asia-Pacific carriers saw revenue plunge $6 billion and North American airlines lost another $1 billion.
The tourism industry also took a beating. The net revenue of Park Place Entertainment, owner of Caesar's Palace in Las Vegas and other gambling and hotel complexes, plunged more than 50 percent in the second quarter of 2003 compared with the year before, mainly because Asian high rollers hunkered down rather than risk infection while traveling.
Fear even hurt businesses dependent on sales calls. AIG, which pulled almost 30 percent of its revenue from Asia back then, was hobbled when the epidemic kept its agents from visiting potential customers.
That's just the easily measured stuff; the indirect costs pushed the total SARS bill much higher. "The biggest driver of the economics of pandemics is not mortality or morbidity but risk aversion, as people change their behavior to reduce their chance of exposure," says Dr. Dennis Carroll, director of the U.S. Agency for International Development's programs on new and emerging disease threats.
"People don't go to their jobs, and they don't go to shopping malls. There can be a huge decrease in consumer demand, and if (a pandemic) continues long enough, it can affect manufacturing" as producers cut output to align supply with lower demand.
If schools are closed, healthy workers may have to stay home with their children. People afraid of becoming infected are less likely to go out to stores, restaurants or movies.
Most of China was essentially on lockdown in the first half of 2003 as the government did everything in its considerable power to minimize human-to-human contact and, hence, the spread of SARS. Beijing was shut down tighter than at any time since martial law was declared during the 1989 Tiananmen Square protests. Discos, bars, shopping malls, indoor sports facilities, and movie theaters were closed, and 80 percent of the capital's five-star hotel rooms were vacant.
By May 2003, Singapore Airlines had cut capacity 71 percent and put its 6,600-member flight staff on unpaid leave. Tourism to Singapore fell 70 percent, and the country's gross domestic product took a $400 million hit that year.
From Asia, where the disease was largely confined, the ripples spread in all directions. Toronto recorded 361 SARS cases and 33 deaths, and the World Health Organization issued an advisory against traveling there — surely a factor in the $5 billion loss Canada's GDP suffered in 2003.
