Bird flu may stall Asian growth: ADB

Bird flu may stall Asian growth: ADB

Francisco Alcuaz Jr., Bloomberg/Manila

A bird flu pandemic could stall Asian economic growth next year and the global economy may shrink as investment and consumption fall, the Asian Development Bank said.

The bank suggested two scenarios. In the first, the psychological impact of the pandemic is short-lived, hurting demand for only two quarters and reducing Asia's 2006 gross domestic product by 2.3 percentage points. In the second, demand is hurt for four quarters, cutting Asia's GDP growth by 6.5 percentage points to 0.1 percent, and causing the world economy to shrink by 0.6 percent next year.

"The psychological impact of the disease may be long lasting," the Manila-based lender said in a report released on Thursday. "Much of the Asian boom is built on confidence in the region's growth potential. A pandemic could shake that confidence and lower future investment."

Singapore and Hong Kong may be the worst affected as they are "significant exporters of services and have open economies," the ADB said. The pandemic could shave more than 10 percentage points from Singapore's GDP, equivalent to US$11 billion. Hong Kong may lose 9 percentage points of GDP and the economies of Malaysia and Thailand could be "seriously affected," it said.

The H5N1 virus has infected 122 people in Thailand, Vietnam, Cambodia and Indonesia since 2004, killing 62 of them, the World Health Organization said on Nov. 1. The United Nations health agency has said the disease could cause a pandemic should it become easily transmissible among humans.

The disease, first identified among poultry in 1997 in Hong Kong, has been found among birds in China, Russia, Romania, Turkey and Croatia. Wild birds in British Columbia, Canada's westernmost province, were found to be infected with the virus, the Canadian Press reported on Nov. 1.

The first scenario of a "mild outbreak" outlined by the ADB assumes 20 percent of Asia's population will become infected with the disease, which may kill three million Asians. The second scenario outlines the same infection and mortality outcome with "serious economic effects lasting four quarters and a psychological impact stretching beyond Asia," the ADB said.