March 14, 2006—A severe avian flu pandemic would trigger a “sharp but short-lived impact” on the global economy, according to the International Monetary Fund. In an assessment of the global economic and financial impact of an avian flu pandemic, the IMF recommends each country prepare their own business plans to counter the risks to their financial infrastructures. While stressing there’s still a high degree of uncertainty about the prospect of an avian flu mutating to a form transmitted from human to human, the IMF says financial systems will suffer from high rates of absenteeism and illness if there’s a pandemic. And the IMF says a pandemic could also spark increased demand from the public for cash from financial institutions, adding that the world’s central banks should now build up supplies of currency notes. “I think what we can say is that in a country that’s basically financially stable which is the vast majority of countries that a really severe pandemic would have a sharp but short-lived impact on GDP,” says Sandy Mackenzie, an Assistant Director in the IMF’s Research Department. “As an illustrative example, GDP might drop very sharply in one quarter and then rebound the next. The decline is due basically to the fact, or a sharp decline, would be due to the fact that rates of absenteeism and illness between them would reduce the labor force and labor time very substantially. “But because in the case of illnesses, the vast majority of people recover, people would be back on the job soon. Absenteeism would come to an end and supply would rebound,” Mackenzie says. The IMF says the degree of preparedness varies tremendously around the world. |
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