Economists will give a wry smile on seeing the above title, as its a well-known mantra that the shape of the US economy determines that of the whole world! Yet, the swine flu outbreak in Mexico seems to affect the world’s business scene just as well..
One of the first things that accompany news of dangerous flu viruses is an economic evaluation of the effects of a pandemic. In a recent article, Reuters pointed out in 2008 that the IMF said a flu pandemic could cost $3 trillion and cause a 5% drop in global GDP. In other words, it would almost certainly turn the current deep recession into a worldwide depression, says Newsweek.
In Hong Kong, where the government machinery is well-versed in handling potential epidemics (after the SARS outbreak in 2003), there are 1,400 empty beds ready to take in isolation cases as and when necessary. Despite this, the Hang Seng Index fell 2.7% yesterday – worse hit being airline shares (Cathay Pacific dropped 8%, China Airlines 13%).
However, behind every dark cloud, there is a silver lining – rubber glove-makers are rubbing their gloved hands in glee. The makers of the only two antiviral drugs approved for the treatment of influenza viruses in general –Tamiflu (Roche) and Relenza (GlaxoSmithKline)-have seen their stocks climb on share markets.