Severe Flu Pandemic May Cost U.S. $623 Billion, World Bank Says

Severe Flu Pandemic May Cost U.S. $623 Billion, World Bank Says

By Jason Gale

Nov. 23 (Bloomberg) -- A severe influenza pandemic would cost the U.S. $623 billion, or about 60 times more than an average flu season, and ``constitute a major global recession,'' the World Bank said.

Economists at the Washington-based World Bank estimated a contagion capable of killing more than 1 percent of people worldwide could cause losses of $1.5 trillion to $1.8 trillion globally. The spread of the H5N1 avian influenza strain has put the world closer to another pandemic than at any time since 1968, when the last of the previous century's three major outbreaks occurred, according to the World Health Organization.

The Bank, which funds projects to alleviate poverty, is working with countries to improve hospitals and laboratories to bolster disease surveillance and management of avian flu. Human fatalities from the H5N1 strain of the virus this year have surpassed the previous two years combined, providing more chances for the virus to mutate into a lethal pandemic form.

``Even with such efforts, an eventual human pandemic at some unknown point in the future is virtually inevitable,'' the Bank said in an e-mailed report today. ``Because such a pandemic would spread very quickly, substantial efforts need to be put into place to develop effective strategies and contingency plans that could be enacted at short notice.''

The H5N1 virus is known to have infected 258 people in 10 countries in the past three years, killing 153 of them, the WHO said on Nov. 13. Millions could die if H5N1 becomes as easily transmissible between people as season flu.

Seasonal flu causes the deaths of as many as 500,000 people annually. In the U.S., the disease results in about 36,000 deaths and more than 200,000 hospitalizations each year, costing more than $10 billion, the White House said in a statement last year.

Egyptian Patient

Egypt reported a suspected new human case in the central city of Sohag, the Al-Ghomhuria newspaper reported today, without saying where it got the information. A 25-year-old woman was transferred to the hospital for treatment, the newspaper said.

A pandemic can start when a novel influenza A-type virus, to which almost no one has natural immunity, emerges and begins spreading. Experts believe that a pandemic in 1918, which may have killed as many as 50 million people, began when an avian flu virus jumped to people from birds.

Disease trackers are monitoring for signs the virus is becoming adept at infecting humans, not just birds. The H5N1 strain was first detected in a farmed goose a decade ago in Guangdong, the same province of China where severe acute respiratory syndrome, or SARS, was reported in 2003.

SARS Experience

During SARS, air travel to Hong Kong plunged by as much as 75 percent during the worst four months of the epidemic and retail sales fell by an average of 9 percent, the World Bank said in its report, ``Evaluating the Economic Consequences of Avian Influenza,'' by Andrew Burns, Dominique van der Mensbrugghe and Hans Timmer.

The World Bank's economic modeling for a flu pandemic assumed a 20 percent decline on an annualized basis in air travel and other mass transportation, as well as in services such as restaurant dining, tourism and non-essential retail shopping. Pandemics are typically experienced in at least two waves, with infections peaking in winter, the authors said.

That could cause the world economy to shrink by 3.1 percent, while gross domestic product could be cut by as much as 4.4 percent in Latin America and the Caribbean, the study said.

``Developing countries would be hardest hit because higher population densities and poverty accentuate the economic impacts in some countries,'' the authors said.

The world economy may contract by 4.8 percent during the first year of a ``severe'' pandemic, 2 percent in a ``moderate'' outbreak and less than 1 percent in the event of a ``mild'' pandemic.

`Purely Illustrative'

``Given the tremendous uncertainties surrounding the possibility and eventual nature of a pandemic inflation, these simulations must be viewed as purely illustrative,'' the World Bank said. ``They provide a sense of the overall magnitude of potential costs. Actual costs, both in terms of human lives and economic losses, are likely to be very different.''

Poultry farmers in infected countries have already suffered because of outbreaks. The World Bank in January estimated the cost at $10 billion in Asia alone. The virus has since been found in wild birds and domestic poultry in at least 38 countries in Asia, Africa, the Middle East and Europe.

South Korean health inspectors are testing poultry for H5N1 on a farm where 6,000 birds died this week in the southwest of the Korean peninsula, the agricultural ministry said in a briefing today.

In Somalia, dozens of bird carcasses have been found in Elbaraf, 55 kilometers (34 miles) north of the town of Johwar, raising fears of an H5N1 outbreak in the Horn of Africa, Reuters reported today, citing Ali Hamud, a local veterinarian.

To contact the reporter on this story: Jason Gale in Singapore at j.gale@bloomberg.net
Last Updated: November 23, 2006 08:14 EST