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Business Braces for Avian Flu


Avian or "bird" flu has the potential to disrupt global business and the economies of countries where the disease may strike. The uncertain extent and severity of a possible avian flu pandemic means that preparations are difficult to make.

If a bird flu epidemic were to strike a major world city, its normally crowded streets and buildings could nearly empty. The same could happen to its subways and other transit systems, its schools, airports and retail stores. Places where people normally crowd together would likely be the places they avoid out of fear of catching the disease. And that, according to many analysts, would have a significant economic impact.

Economic Impact

Last December, the U.S. Congressional Budget Office issued a report forecasting that U.S. gross domestic product, or G.D.P., the overall value of goods and services produced in a given year, could fall by five percent in an avian flu pandemic. Last year, G.D.P. was about $12.5 trillion, so a five percent reduction would be about a $625 billion loss to the U.S. economy.

Don Marron, Director of the Congressional Budget Office, says his study projects that the economic impact would vary among economic sectors. "We assumed that most of the negative effects [of a bird flu pandemic] would be concentrated in those sectors that require people to get together. So entertainment, arts, recreation, lodging [and] restaurants [would be the most likely to suffer]. Things like retail would have a smaller reduction in demand [i.e., economic activity]. And then, of course, the health care sector would have an increase in demand," says Marron.

Marron says his researchers built much of their avian flu projections on what happened with the 2003 Severe Acute Respiratory Syndrome, or SARS, epidemic that hit southeast Asia, especially Hong Kong, and Toronto, Canada. A private consulting firm in the northeastern U.S. state of Massachusetts, Bio-Gen, also used the SARS outbreak as a model. Bio-Gen President Steve Aldrich says there was a pattern that may also hold true if avian flu develops into a human pandemic.

"There was about a $50 billion economic impact caused by the disease, but only one or two percent of that impact was the actual cost of dealing with people infected with the disease. The vast majority of those costs were inflicted on the economy by people who were making decisions in fearful anticipation of the disease's arrival," says Aldrich.

Human Loss

Aldrich says that if avian flu appears in a city such as New York, the effects could be much like those with SARS. He says business travel, conventions, hotel bookings and other activities would all but shut down. This, he says, would also cause businesses that support travel, conventions and entertainment to suffer.

Along with the economic impact, an avian flu pandemic would also cost human lives. The Insurance Information Institute, a New York-based trade group, has done projections on fatalities in a possible bird flu pandemic. Its study is based on what happened at the end of World War One, when influenza killed a half million people in the United States, and perhaps 40 million people worldwide. The Institute's Steven Weisbart says avian flu would also be a major killer.

"The total number of projected deaths for a severe [avian flu] pandemic modeled on the 1918 Spanish flu in America would be 1.9 million deaths. The insured deaths would produce total life insurance claims [in the range of] $133 billion," says Weisbart.

The Congressional Budget Office says that during a severe flu pandemic, 30 percent of the total labor force - - which was nearly 150 million people in 2004 - - could become seriously ill, and that if 2.5 percent of them died, that would represent more than a million fatalities. And such a loss in the workforce could affect G.D.P. for years after the pandemic.

Bird Flu Outbreak Action Plans

The Conference Board, a New York-based business research group, has also studied the possible impact of avian flu. The Board's Ellen Hexter says that if large numbers of people get sick, vital financial services may be severely affected.

"Companies are going to face real liquidity problems when they cannot collect on their bills. [More problems will surface] when people can't get direct-deposit paychecks, if companies even have the wherewithal to continue to pay their employees. And a lot of companies are suggesting that they [i.e., employees] have some cash at home because A.T.M.s [i.e., automated teller machines] may not work, for example," says Hexter.

The Conference Board calls on companies to work out action plans, not only to maintain cash liquidity but also to ensure that key parts of company operations remain staffed and have decision makers. Congressional Budget Office Director Don Marron says the U.S. government is also making comprehensive preparations ahead of a possible avian flu outbreak.

"Some of the things that are being pursued by the government is doing surveillance around the world so we have as much time as possible to react [to the pandemic, if it comes]. Here domestically, increase the capacity we have for producing vaccines, and stockpiling in advance vaccines that may be close enough [to the avian flu] to provide some help. And finally, there are efforts underway to improve the resilience and flexibility of our public health system," says Marron.

What is consistently stated in both U.S. government and private sector reports on the avian flu is the need for broad inter-government and government - private sector cooperation. Those reports warn that if there is a bird flu pandemic, the resources needed to combat it would be strained to the limit. On the brighter side, however, are recent studies suggesting that based on what has happened so far, avian flu may not become widely contagious among humans. But memories of SARS, and especially the deadly 1918 flu pandemic, will undoubtedly keep America - - and the world - - on guard.

This story was first broadcast on the English news program,VOA News Now. For other Focus reports click here.