Global bird flu outbreak slows growth, says ADB<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
A global bird flu pandemic could have a severe impact on
\nregional consumption and productivity, crippling the economies of
\nIndonesia and the East Asian region, a new study from the Asian
\nDevelopment Bank (ADB) reveals.<\/p>\n
In a worst-case scenario, Indonesia's gross domestic product
\n(GDP) growth next year could be cut back by as much as US$5.8
\nbillion -- or 2.8 percentage points -- as consumers and investors
\nworldwide reduce their activities due to the outbreak.<\/p>\n
East Asia could lose up to a total of $297 billion of its GDP,
\nslashing its expected growth rate by 6.8 percentage points.<\/p>\n
The ADB is estimating a 5.9 percent GDP growth for Indonesia
\nin 2006 and a 6.6 percent growth for the whole region.<\/p>\n
The scenario assumes the bird flu outbreak of having an
\ninfection rate of 20 percent and a mortality rate of 0.5 percent
\n-- which is equivalent to three million fatalities in Asia --
\nwith serious economic effects lasting four quarters and a
\npsychological impact stretching beyond the continent.<\/p>\n
Even in a milder version of the scenario, in which the
\neconomic effects would last only two quarters and be felt in Asia
\nalone, Indonesia could still suffer a GDP reduction of $1.4
\nbillion, or 0.7 percentage points, while regionally GDP cutback
\nwould be $113 billion, or 2.6 percentage points.<\/p>\n
"On the demand side, a pandemic is likely to affect consumer
\nconfidence and change consumption and social patterns. On the
\nsupply side, it will affect the availability of labor as illness
\nwill force many workers to stay home, and affect the livestock
\nsector negatively," the ADB said in its report, released on Nov.
\n3.<\/p>\n
The research was conducted by ADB economist Erik Bloom, senior
\nhealth specialist Vincent de Wit and economics officer Jane
\nCarangal-San Jose.<\/p>\n
"The psychological impact of the disease may be long lasting
\nas well. Much of the Asian boom is built on confidence in the
\nregion's growth potential. A pandemic could shake that confidence
\nand lower future investment," the report said.<\/p>\n
According to the report, some Asian economies could be harder
\nhit than others, depending on their vulnerability to external
\nshocks, and whether they depend on a significant quantity of
\nservices, including tourism.<\/p>\n
Singapore, China, Hong Kong, Malaysia and Thailand are
\nsignificant goods and services exporters in the region.
\nIndonesia's services and tourism sectors, meanwhile, contribute
\nto some 5 percent of the GDP, but its economy is known to be
\nprone to external shocks.<\/p>\n
Any economic impacts from a bird flu outbreak would be another
\nblow to the economy, which is already expecting a slowdown to 5.7
\npercent this year, amid a recent rise in inflation and interest
\nrates. Economic growth of 6.2 percent has been targeted for next
\nyear.<\/p>\n
In light of the situation, the ADB urged governments to be
\ntransparent, as well as to disseminate accurate and timely
\ninformation about bird flu cases in their countries.<\/p>\n
"Recent experiences with SARS and other disease outbreaks have
\nshown that the public and markets often panic in the face of
\nuncertainty," it said.<\/p>\n
The ADB estimated that the economic impact of SARS, which
\nkilled 800 people worldwide in 2003, was around $18 billion in
\nEast Asia alone. The bird flu, meanwhile, has infected 122 people
\nand killed more than 60 in the region since 2003.<\/p>",
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