The swine flu outbreak could shatter fragile signs of a global economic rebound, but the gravity of its impact depends on the death toll it inflicts and the panic it generates, analysts said.
For Asia, where some countries are in recession, the crisis has revived memories of the severe acute respiratory syndrome (SARS) outbreak in 2003 that killed hundreds, halted travel and sent economies reeling.
Asia’s first case of the A (H1N1) virus was confirmed in Hong Kong on Friday, the epicenter of the 2003 SARS outbreak when close to 300 people died. “The global economy faces yet another huge challenge,” research firm Moody’s Economy.com said in a market analysis.
“The recent outbreak of swine flu in Mexico and its rapid spread to other countries could interrupt trade and investment, exacerbating the worldwide recession for an uncertain period.” The World Health Organization has raised its flu alert level to five out of six, signaling a pandemic was “imminent” as more nations announced cases.
At least 19 confirmed deaths from the virus have been reported in Mexico and one in the United States.
If the swine flu outbreak is similar to SARS, the impact will be sharp but would last only for several months, economists said.
“The risk here is if swine flu is actually more lethal than SARS and containment measures are not effective,” Leong Wai Ho, a Singapore-based regional economist with Barclays Capital, told AFP. “Under that scenario, the impact is likely to be prolonged and more profound.”
Song Seng Wun, a regional economist with CIMB-GK Research, said swine flu could stamp out any tentative signs of recovery from the worst global economic crisis since the Great Depression.
“If it stays as a flu bug... perhaps it may not do too much damage to the current signs of stabilization,” he said. “But if things were to take a turn for the worse, the early shoots of recovery may be snuffed out.”
Song said business confidence has begun to show signs of revival after governments worldwide rolled out stimulus packages to fight the recession and some companies were starting to receive more orders. “If there’s any knock to the fragile business confidence at this point, it may easily die out again,” he warned.
Swiss banking giant Credit Suisse said the economies most vulnerable to a fallout from swine flu would be “those having sizeable tourism, retail and transportation sectors” like Hong Kong, Malaysia, Singapore and Thailand. Moody’s said the world’s poorer nations, where infections might be harder to detect and treatment may not be readily available, will bear the brunt of the impact should the outbreak escalate into a pandemic.
This could affect efforts to reduce poverty, Moody’s said.
For more developed economies like Singapore, Hong Kong and Taiwan, “weak confidence may be a bigger threat than the disease itself,” it added.
Private consumption, a key economic growth driver after exports have fallen, could suffer if swine flu forces people to stay indoors. This could hinder an economic rebound in the same way as SARS, which came as the region recovered from the impact of the technology crash in 2001 and the Bali bombings in 2002, analysts said.
“The economic effects of consumers and travelers staying at home will most likely be larger than the costs of fighting the virus,” Moody’s said. Economists said that Asia and other major economies such as the United States and European nations are better prepared now to tackle the threat.
