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In a new report, the International Monetary Fund says the global
economic impact of a bird flu pandemic would vary depending on its
severity. IMF financial systems expert David Hoelscher says there is no
way to forecast this.
"There is a high degree of uncertainty about the virus. We don't know
if it will mutate to a form that can be transmitted human to human, and we
don't know how deadly this virus might be if it were to mutate, and we
really can't specify with any certainty what the economic and financial
impact might be."
The International Monetary Fund does say that if a flu pandemic were
severe, the biggest impact would be due to absenteeism from the workplace.
This would disrupt sectors such as trade, transportation, utilities, and
the banking and health systems. Absenteeism would also cause consumer
demand to plummet, reducing business investment and cash flows between
countries. In addition, to control the virus, countries might impose
restrictions on exports.
This would cause a drop in commodity prices, although this might be
offset by potential supply disruptions of key commodities like oil.
The IMF links the amount of economic dislocation to the severity of a
flu pandemic. It says rapid global transportation and mass communication
might increase some risks, while better public health systems and drugs
might act in the opposite direction.
But whatever the level of economic dislocation, the agency says the
impact would be temporary. IMF researcher Sandy Mackenzie suggests that in
an economically stable country, output might decline for only one quarter
of the year, with activity resuming quickly the next.
"Because the vast majority of the people recover, people would be back
on the job soon and supply would rebound. Similarly, consumer demand would
rebound as people purchase things that they had postponed, like consumer
durables."
International Monetary Fund experts say the best business and financial
institution contingency planning has occurred in Hong Kong, Singapore, and
Canada - places hit hard by sharp tourism drops in 2003 because of the
outbreak of SARS, the Severe Acute Respiratory Syndrome. It notes that
financial institutions, central banks, and regulators have stepped up
their risk planning in recent years in many advanced economies with
activities such as identifying back-up teams at alternate sites.
But the IMF says business planning for a bird flu pandemic varies
greatly around the world, and cross-border cooperation is at an early
stage.
The IMF's Sandy Mackenzie says the fund staff is collecting and
spreading information about the elements of good business planning among
its member countries.
"We view the Fund's program, really, as a kind of insurance. We see
this business continuity planning as a form of comparatively cheap
insurance." | 
