Bird flu could cost Asian economics $283bn

The World Bank highlighted the potentially huge human and economic costs from any bird flu pandemic, while the Asian Development Bank (ADB) said such an outbreak could push the world economy into recession. The ADB said a year-long shock from bird flu in humans would cost Asian economies as much as $283 billion and would reduce the region's gross domestic product by 6.5 percentage points, hitting Hong Kong and Singapore the most.

The World Bank, issuing a separate twice-yearly report on East Asia's economies, said the spread of avian flu was so far confined to the rural areas of several Asian countries but was a big risk to growth in 2006 due to potential policy actions such as quarantines and travel restrictions.

"While the costs of dealing with this have so far 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," said Milan Brahmbhatt, economist and main author of the report.

The report said the most immediate economic impacts of a pandemic might arise -- as was the case with the deadly SARS outbreak of 2003 -- not from death or sickness but from people and governments responding in an uncoordinated way.

While the bank said it was foolhardy to try to estimate costs from such a shock, it noted disruptions from SARS resulted in the loss of possibly 2 percent of East Asian GDP in one quarter.

A 2 percent loss of global GDP during a global influenza pandemic would represent around $200 billion in one quarter, the World Bank said.

It said East Asia's economies should grow 6.2 percent this year and next, down 1 percentage point from 2004 levels, as the region copes with high oil prices and tighter monetary policy.

China's GDP growth should moderate to 8.7 percent in 2006 from a likely 9.3 percent this year, but other parts of the region will see better growth and Japan's recovery will help Asia reduce its dependence on U.S. demand, the World Bank said.

The bank said interest rate rises in Asia might dampen growth in the short term but would be beneficial in the long run.

"While higher rates may temporarily moderate the buoyancy of recovery in domestic demand in the region in the near term, by helping to ensure moderate inflation and macroeconomic stability, it will help promote more sustainable growth in the medium term," the World Bank said, reports Reuters. I.L.