Economic Impact of Avian Flu

	Interview with Milan Brahmbhatt, lead economist in the World Bank's East Asia and Pacific region

November 2, 2005—Avian flu poses one of the biggest uncertainties in the generally positive outlook for East Asian economies, according to the World Bank’s latest economic update for the region.

The Bank’s chief economist for East Asia, Homi Kharas, describes avian flu as “the big risk that overshadows what will happen in the region.”

Kharas was speaking at the release of the latest regional economic report which forecasts growth in the East Asia region at six point two percent in 2005 - with the region’s economies countering a series of threats including rising oil prices and higher interest rates.

As the report notes, avian flu is now endemic in the poultry flocks of many countries in the region and has also spread to Europe and central Asia.

“There have been substantial outbreaks in the poultry populations across a number of East Asian countries, “Kharas says. “Although there have been relatively few human casualties so far, there is considerable concern that this strain of flu might mutate into a form which could cause substantially higher human casualties and then substantially higher economic costs as well.”

The report says since the spring, outbreaks of avian influenza A (H5N1) among wild birds and poultry have spread to Central Asia and Eastern Europe. New outbreaks have also occurred this year in several East Asian countries.

The confirmed number of human cases reported to the World Health Organization since the end of 2003 has increased to 121, of who just over half have died.

Lead economist for East Asia and the Pacific region, Milan Brahmbhatt, says the main economic impacts of avian flu so far have occurred in the rural areas of several East Asian countries.

He says the basic impact has been felt in the agricultural sector among producers of poultry. But he says the effects are much wider – affecting distributors and well as producers of feed and other inputs for poultry.

“There’s been a fairly significant impact in that sector and we also have some evidence that poor or low income families tend to be more affected, as they tend to be more reliant on poultry as a source of income,” he says.

“While the costs of dealing with this so far have been limited to around 0.1 percent of GDP, from culling birds and implementation of better animal health surveillance systems, the potential impact of a serious pandemic is of grave concern.” 

The report warns if avian flu expands to a widespread human influenza, it could exact a “dreadful toll in human life and economic losses both in Asia and the world.”

It says there are great uncertainties about the timing, virulence and general scope of a future human flu pandemic but ”all agree it could lead to at least several million human deaths.”

Brahmbhatt says it’s difficult to know when or if the virus might mutate into a form capable of transmission among humans but “there is a significant risk and certainly enough for governments everywhere to take precautions.”

As for the impact, the report says the most immediate economic impact of a pandemic
might arise – as in the case of SARS – not from actual death or sickness, but from the uncoordinated efforts of individuals to avoid becoming infected, as well as public policy actions like quarantines and travel restrictions.

The report says these could lead to severe demand shocks for the services sectors, such as tourism, mass transport, retail, hotels and restaurants, as well as a supply shock due to workplace disruption.

“A severe global flu pandemic could also entail a sizeable loss of potential world output through a reduction in the size and productivity of the world labor force, due to illness and death, as well as heavy medical and hospitalization costs,” the report warns.

“Dealing with the influenza threat requires top political priority in an approach that brings together agriculture, animal health, human health and finance, along with the best technical help from international agencies who are mobilizing to support country initiatives,” Brahmbhatt says.

He says at the political level, an honest, transparent public information policy will be critical in winning the trust and confidence of the population, so as to minimize panic and disruption.

And the report warns there’s “clearly a priority on curbing avian flu at source in the agricultural sector through implementation of strong animal and human health surveillance, disease control and mitigation measures, thereby reducing the probability of a far more costly human epidemic.”

Country representatives and international agencies, including the World Health Organization, the Food and Agriculture Organization, the World Organization for Animal Health and the World Bank, will meet in Geneva from November 7 to 9 to strengthen global coordination and assess national plans, focusing on affected and at risk countries.