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Asian Development Bank Says Economic Impact of Bird Flu on Asia, World Could be Massive

The Asian Development Bank estimates that a bird flu pandemic would have a massive impact on Asian economies, causing as much as $297 billion in damage, and possibly forcing the entire world into recession.

The ADB report bases its projections in part on the impact of the SARS epidemic in 2003, which began in Southern China, and spread as far as North America and South America. The ADB estimates the economic impact of SARS in East Asia alone was around $18 billion.

The SARS epidemic lasted only for several months, infected about 8,000 people and killed 800 worldwide.

But a bird flu pandemic involving the H5N1 strain of the virus is forecast to be much more damaging in human and economic terms. The ADB report quotes the World Health Organization as estimating that between two and seven million people could die worldwide. Other estimates are much higher.

Erik Bloom, the ADB economist who was the lead author of the report, sees two possible economic scenarios in a bird flu pandemic.

"In the first scenario we're looking at a relatively short psychological impact lasting about two quarters [six months]," he explained. " And in this case we would expect to see demand, in particularly the trade in services, to decline significantly, for about two quarters. In the second scenario we consider a much longer psychological impact in which consumption and the trade in services declines for about a year. Under the second scenario, the economic impact is substantially more severe."

In the first case, the ADB says Asia could suffer a total of about $113 billion in losses. In the second case, it says, the figure jumps to about $297 billion, while the global trade in goods and services would shrink by around 14 percent - the equivalent of $2.5 trillion. This would likely force the world into a recession.

Mr. Bloom notes that the psychological impact of such a disease is much greater than the direct results of sick workers and lost production.

"The fact that people panic, that their consumption declines, is much more important economically than the actual impact of the disease," he said. "And this is something we saw with SARS as well. Very few people were actually affected by SARS, and yet it caused a significant slowdown in economic growth. "

Mr. Bloom says economies would suffer from a decline in activities that require personal contact, such as dining out, movies, domestic travel and trade shows. He noted that this was the case in Hong Kong and Singapore, two major Asian business centers, during the SARS outbreak.

Since 2003, more than 60 people have died from the H5N1 strain of bird flu in Southeast Asia. So far most of the victims have contracted the virus from infected poultry. Authorities fear the H5N1 virus could mutate into a form that passes easily from person to person, which could cause a pandemic.

Mr. Bloom says there is a significant need for outside contributions for countries such as Vietnam and Indonesia that could be hard hit. A donors' conference is set for November 7 to 9 at WHO headquarters in Geneva to assess the specific needs of countries.