The mutation of bird flu leading to human-to-human transmission and a potential cross-country outbreak of the disease in Asia would slow or halt economic growth in the region, the Asian Development Bank (ADB) said in Manila Friday.
"A pandemic (of bird flu) will likely slow or halt economic growth in Asia and lead to a significant reduction in trade, particularly of services. In the long run, potential economic growth will be lower and poverty will increase," the ADB said in a policy brief titled Potential Economic Impact of an Avian Flu Pandemic on Asia.
Provided that the psychological impact of a bird flu pandemic is short-lived and only seriously affects demand for two quarters, Asia faces a demand shock of around US$99.2 billion in its 2006 GDP, the equivalent of 2.3 percentage points of GDP, the ADB report said.
Assuming that the same impact lasted longer and seriously affected demand for four quarters, the estimated loss would be 282. US$7 billion in Asia, around 6.5 percentage points of its GDP, the report added.
The ADB also noted that "avian flu presents a major potential challenge to the development of the region, perhaps the most serious since the financial crisis of 1997."
Governments should react to the outbreak responsibly and not contribute unnecessarily to panic, the ADB suggested.
The report was prepared by the ADB's economist Erik Bloom and economics officer Mary Jane Carangal-San Jose.
Their analysis looks at a relatively mild outbreak, based on the historical experience of previous flu outbreaks and SARS. It focuses on the short-run impact of a pandemic on aggregate economic activity, the report said.