Pandemic influenza: the worst economic scenario

The threat of an influenza pandemic has disappeared from headlines again lately, at least in the UK where a political scandal around MPs expenses has driven everything else off the news. But that doesn't mean that the outbreak has died down yet. In fact, just over 1000 new cases have been confirmed worldwide in the last 24 hours. Similarly, although travel warnings that had been in place for Mexico have now been lifted by some countries (including the UK), and cruise lines are planning their return to Mexico's ports, the possible cost to the global travel economy of a full-blown pandemic has recently been released.

The recent Global Travel and Tourism Summit, organised by the World Travel and Tourism Council (WTTC) in the southern Brazilian resort of Florianopolis heard projections of just how much a full-blown influenza pandemic could cost the travel industry and world economy. John Walker, head of the British firm Oxford Economics, presented forecasts his firm had prepared for the World Health Organisation (WHO). The worst-case scenario could see the number of travellers dropping by 25 to 30 percent, and the global economy hit by more than US$2 trillion, he told the conference.

"The effects on the tourism industry would be very, very severe," he said.

Although he and other top participants at the event all observed that the H1N1 flu outbreak had so far been relatively mild outside of Mexico, they cautioned that its possible return in mutated form in the winter left little cause for comfort.

A pandemic limited to just a few countries would have little overall effect on the travel industry because people would likely just shift their vacation destinations away from affected spots, he explained, based on what happened during the 2003 SARS (severe acute respiratory syndrome) epidemic in China.

But a generalised spread of H1N1 could cause the world economy to lose US$2.2 trillion spread over this year and next year, compared with US$25 billion in the case of SARS.

The losses would not only be in the form of reduced or stalled travel, but also from a cut of up to 30 per cent in discretionary spending and other flow-on effects from fear of the flu, the economist said.

The main effects would come if a pandemic hits all regions of the world, sending both domestic and international travel into a slump. Douglas Adams, director of consultancy services for Oxford Economics, says: "The headlines are pretty stark. For a SARS-type of outbreak restricted to one region of the world it suggests only a very minor knock to global GDP – perhaps of the order of 0.05%. The story for a true pandemic, with aggressive restrictions on travel, is quite different, and could be as much as 4% of global GDP, and that's just the impact that transmits through travel and tourism."

Even the SARS impact ran to tens of billions of dollars. Oxford Economics estimated in September 2003 that the total cost to the Asian regional economy in GDP terms would be $20bn in that year – about $2m per person infected by SARS.

Nevertheless, the message at the WTTC summit was 'keep travelling'. "We are overacting and we are over-informing," said Jean-Claude Baumgarten, WTTC president.

"We (the industry) are feeding the situation…talking about it is making it worse…keep travelling, we need a cooler reaction to the situation," said Gerald Lawless, CEO of the hotel group Jumeirah. But Geoffrey Lipman, assistant secretary of the United Nations World Travel Organisation (UN-WTO) offered a note of caution – saying that any potential second wave of swine flu could affect the industry a lot more.

He and other panellists said they had repeated a message that the current flu outbreak should be countered with frequent handwashing and other basic hygiene measures, and travel should not be curbed.

But they agreed they had little control over the way the media handled the story, or over the reaction of scared governments and the public.

On 19 May, the World Health Organisation (WHO) reported that 40 countries have officially reported 9830 cases of influenza A(H1N1) infection, including 79 deaths. This is up from 8829 cases and 74 deaths listed up to the previous day.

Mexico has reported 3648 laboratory confirmed human cases of infection, including 72 deaths. The United States has reported 5123 laboratory confirmed human cases, including five deaths. Canada has reported 496 laboratory confirmed human cases, including one death. Costa Rica has reported nine laboratory confirmed human cases, including one death.

WHO is not recommending travel restrictions related to the outbreak of the influenza A(H1N1) virus.

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