The markets have begun to pop champagne over the global economic recovery, but the elephant lurking in the room — swine flu — could trample those green shoots.
Spotted just four months ago, the new A(H1N1) influenza virus by June spread into a global pandemic and experts warn it could take a toll on productivity and financial systems, depending on the severity of outbreaks. About 1,800 people have died in the pandemic that now affects more than 170 countries, according to the WHO.
Though the number of cases reported has topped 182,000, the UN health watchdog cautions that the real number is higher because countries are no longer required to test and report individual cases.
Health officials are gearing up for a resurgence in cases as the northern hemisphere enters winter. So far, swine flu infections have been relatively mild, with typical flu symptoms that last about a week.
However, the pandemic virus could mutate into a more deadly form. Officials are projecting a shortfall in vaccines that are being rushed to market in hopes of warding off a global health disaster.
Faced with the unpredictability of flu viruses, economists say it is hard to assess the impact of swine flu on the delicate global economic recovery taking shape amid the worst world recession since World War II. So will the elephant leave the party quietly or run amok?
“As the severity of A(H1N1) is so far not severe, we would not expect the magnitude of the shock to the economy to be large relative to GDP,” IMF spokeswoman Simonetta Nardin said. “The main threat to financial stability is the risk that high levels of absenteeism could lead to breakdowns in the functioning of key financial systems.”
School closures would worsen absenteeism, further reducing workplace productivity.
Nardin said the effects of swine flu on global financial stability and the world economy would be covered in future updates of the IMF’s Global Financial Stability Report and World Economic Outlook (WEO), “as warranted by events.”
World Bank experts have estimated that the potential economic costs of a global influenza pandemic could range from 0.7 percent to 4.8 percent of global GDP, depending on the severity of the outbreak.
The lower estimate was benchmarked on the Hong Kong flu of 1968-1969, while the upper estimate was based on the devastating 1918-1919 Spanish flu, which infected an estimated one-third of the world’s population and caused 50 million deaths.
Based on the IMF estimate of 2009 global GDP of US$54.863 trillion, the swine flu pandemic, using the World Bank simulation, could cost the globe between US$384 billion and US$2.633 trillion.
“In the case of a serious flu, 70 percent of the overall economic cost would come from absenteeism and efforts to avoid infection,” World Bank experts wrote in the Global Development Finance report released in June. “Generally speaking, developing countries would be hardest hit, because higher population densities, relatively weak health care systems, and poverty accentuate the economic impacts in some countries.”
The swine flu virus was first identified in California in late April and officials linked the new virus to an outbreak of illnesses in Mexico.
Mexico has borne the brunt of the economic costs of the epidemic, particularly in the transportation and tourism sectors.
“While we expect these effects to dissipate quickly following the peak of the epidemic in May, we estimate that the swine flu epidemic will have lowered GDP growth in Mexico on the order of 0.5 to 1.0 percent in 2009,” an IMF official said on condition of anonymity.
“These effects are already factored into our baseline outlook for growth in Mexico of negative 7.3 percent in 2009, as released in the July 2009 WEO,” the official said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last