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| Swine flu is the last thing the fragile global economy needs |
| Rob Cox / Apr 28, 2009, 00:58 IST |
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When the US economy catches a cold, the whole world sneezes. That’s the cliché many in finance employ to describe the interrelated nature of the global economy. But what happens when the US economy catches something a bit more severe? We may be about to find out.
The US government declared a health emergency following the discovery of two dozen cases of the same strain of swine flu that had by Monday killed over 100 in Mexico. As Homeland Security chief Janet Napolitano counseled, there’s no reason to panic just yet. This is just a precaution. But with the US economy already suffering a bad case of the lurgy – bringing the rest of the globe down with it – the last thing it can sustain would be a serious epidemic. The last time the world withstood anything similar was the 2002-2003 bout of severe acute respiratory syndrome (SARS), which emanated in China’s Guangdong province and spread to some three dozen countries.
The human toll from SARS, at nearly 800 deaths, was not terribly high. It was a pin-prick compared to the Spanish influenza at the end of World War 1, when an estimated 20m-100m died. But the resulting panic caused many travel-related businesses in the hardest hit areas to suffer severely. The World Health Organisation estimated that international travel to areas such as Hong Kong, Beijing and Toronto fell by more than half, with hotel occupancy down 60%.
With hindsight, the epidemic did little to dent the trajectory of growth in the regions of East Asia that were most affected. China’s GDP grew a healthy 9.3% that year, reflecting only the slightest impact from the avian flu scare. Hong Kong grew a robust 3.3%, up a full percentage point from the previous year.
This time could be different. Even assuming the Mexican flu strain is no more deadly than SARS, it comes at a fragile moment. The financial crisis and resultant economic contraction is already taking heavy casualties on the businesses and economies most dependent on trade, transportation, tourism and lodging, which are most susceptible to the flu bug.
Moreover, governments everywhere are managerially challenged, what with bank bailouts and huge stimulus packages to fund. A severe flu epidemic would open a fourth or fifth front. One of the good things about SARS was that Asia, at least, learnt a lot about epidemic control. Hong Kong, for example, has passenger temperature sensors at its airport that can be used to screen for people who might be carriers of such bugs. For the sake of the global economy – and the human race – this had better be a flu that can be easily contained.
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