Investment banks are starting to issue warnings on the risks that avian influenza poses to the economies and financial markets of East Asia, even as health experts struggle to assess whether the disease has the potential to cause a pandemic at all.
With Asia, and particularly China, now the main area of global economic growth along with the US, economists across the region are considering any factors that could derail the region's expansion. Many such risks are familiar ones -- an earthquake in Japan, a banking crisis, civil unrest in China or a conflict in the Taiwan Strait.
What is striking in the last two months, though, is the prominence with which avian flu, often called bird flu, is being mentioned as a risk as well. Discussion of the disease has increased in tandem with public anxiety, as seen by controversy here in the last few days over whether the municipal stadium might be used to treat overflow patients from hospitals in the event the disease spread. The stadium's neighbors were predictably unenthusiastic.
CLSA Asia-Pacific Markets, the Asian investment banking arm of Cridit Agricole of France, estimated in a report on Monday that the disease had already cost Asian nations US$8 billion to US$12 billion, mostly from the deaths or destruction of 140 million chickens and other poultry. But the cost would be greater if the disease gained the ability to spread easily from person to person, a possibility that is not factored into current stock and other asset prices, said Christopher Wood, CLSA's chief equity strategist.
No way to discount
"It would be a regional panic and potentially a global panic," he said, adding, "There's no way markets can discount this."
CLSA hired a US company, Bio Economic Research Associates, to produce much of its report, part of a growing reliance in East Asia on medical assessments of market risks after outbreaks in 2003 of severe acute respiratory syndrome, or SARS. That disease nearly paralyzed air travel in the region and dealt severe, if short-lived, blows to stock and real estate markets.
Tim Condon, chief Asian economist at the ING Group, said that while avian flu was a big risk for Asia, it was extremely difficult to estimate the prospects of its becoming significantly more damaging.
Generally, a pandemic involves the spread of a disease over a wide region. While the World Health Organization (WHO) has confirmed 79 human cases, including a family of 5 in Vietnam on Monday, it has said that the minimum for a pandemic is 2 million to 7 million dead.
Different from SARS
Among corporate pessimists, Citigroup has issued increasingly dire warnings, saying that bird flu could become much worse than SARS. Unlike SARS, influenza probably could not be stopped through quarantines or fever-recognition scanners at airports, because influenza victims become infectious up to a full day before they start exhibiting symptoms.
Don Hanna, Citigroup's chief Asian economist and one of the gloomiest voices in Asia about bird flu, said that while SARS caused a brief dip in demand as people stopped going to restaurants and shops, a widespread influenza outbreak among humans could hurt the supply and demand for goods during the course of the disease and for years afterward.
Other banks are considerably less worried, and they cite the swift rebound of economies and financial markets from SARS. "People are going to be a little bit less alarmist about health concerns," said Adrian Mowat, Asian equity strategist at JP Morgan. "We all survived SARS."
Influenza experts from around the world will be meeting with US officials in Washington this week to review what is known about the disease and what steps can be taken to prevent a pandemic.
Arnold Monto, a University of Michigan epidemiologist who is in Washington for the meeting, said that with fewer than 100 confirmed human cases of avian influenza in a year and a half despite its widespread incidence in Southeast Asian poultry, it was possible that the disease would not evolve the capability to infect people easily.
But Monto said that grimmer possibilities remained.
"We have to prepare for the worst," he said.
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