By Don Miller
Associate Editor
Money Morning
The delicate state of the global economy could be rocked by an outbreak of swine flu, which has killed over 100 people in Mexico and infected many others in the United States, Canada, Spain and New Zealand.
Underscoring the serious nature of an outbreak is a study conducted by the World Bank in 2008, which estimated a major swine flu pandemic could cost $3 trillion and cause worldwide gross domestic product (GDP) to plummet almost 5%.
"A nasty chill will run through the market…as people think back to the SARS virus," Justin Urquhart Stewart, investment director at Seven Investment Management, told Reuters.
"The threat of the pandemic will add further weakness to global trade - we saw with SARS tangible percentage points knocked off the index and that was in a buoyant time. Put that in a weaker time and it is likely to be more unpleasant," he said.
The SARS outbreak cost the Asia Pacific region an estimated $40 billion when it disrupted travel and trade for six months in 2003. It killed 775 people in 25 countries.
The Mexican outbreak of swine flu comes just as world policymakers began to see signs that the global economy might finally be stabilizing after being hammered by a withering recession for more than a year.
"Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically,” Lawrence Summers, economic adviser to President Barack Obama told reporters on Sunday. "Today, the picture is much more mixed. I think that sense of unremitting freefall that we had a month or two ago is not present today."
Swine flu is a respiratory disease of pigs caused by type-A influenza that regularly leads to outbreaks in swineherds, according to the U.S. Center of Disease Control (CDC). The three main human flu strains cause 250,000 to 500,000 deaths a year in seasonal epidemics, according to the World Health Organization (WHO).
Pandemics occur when a unique strain of influenza emerges and begins spreading, mainly because almost no one is naturally immune to the virus, according to Bloomberg News.
Heading the list of sectors that may feel the impact is the travel and tourism industry. Travelers may cancel trips and many businesses have plans to limit travel if a pandemic starts.
As worries about a global pandemic surged, the U.S. government yesterday (Monday) began border screening for swine flu exposure.
