Bird Flu Alarm

Understanding Avian Influenza

Disease threat to business

Disease threat to business

The outbreak of new bird flu cases in Turkey has sparked renewed fears that the world economy could be at risk from any worldwide flu pandemic in humans.

The World Health Organization (WHO) has confirmed two human deaths in the country from the current H5N1 bird flu strain - the first in Europe.

The virus has now caused 77 deaths in six countries, but should the strain mutate into a form that can be transmitted between humans, experts believe it could quickly sweep around the world, blighting trade and decimating workforces.

The World Bank has identified bird flu as a "large shadow" that could harm growth in some parts of the world.

The global economy could be badly hit if sick employees were forced to stay at home. A number of key industries, such as tourism, would be directly affected.

The airline sector would also suffer if business and holiday travel fell. Currencies in outbreak hotspots could be hit and quarantines might disrupt global trade. Widespread industrial closures could have a knock-on effect on oil prices.

Many large firms are drawing up contingency plans to deal with any outbreak, including the world's third-largest bank, HSBC.

'Illness rates'

Turkey is now worried about the health of its lucrative tourism industry, which is growing at more than 10% a year.

Forecasts issued before the current outbreaks had predicted the sector would bring in more than $20bn in foreign currency earnings by 2007.

"Some of the people looking now to book their holidays for this summer will be thinking twice about going to Turkey," says Dr Adam Blake, of Nottingham University's business school.

"But places like Italy, Greece, Spain and the UK would experience significant effects on their tourism if there was a pandemic," he adds.

Just as dangerous for economies based on tourism, he says, is the "panic" factor which comes with just a few infected birds being found in a country.

"That alone is enough to create a scare and deter visitors."

Dr Blake says any pandemic will hit staffing levels in all countries.

"Health officials are saying up to a quarter of the workforce will be affected in some way if there is a human pandemic that goes around the world.

"All types of businesses should be looking at that as an average, while some are going to have a higher rate of illness and deaths."

'Worst case'

However, international groups can use their global size and modern working methods to lessen the impact on their firms.

HSBC, for example, believes up to half its workforce could be knocked out of action by a bird flu pandemic.

HSBC says this was a "worst case" for the number of people unavailable for work, but it made sense to plan for every eventuality.

HSBC, which has 253,000 staff worldwide and operates in 77 countries, saw its business in Asia affected by the Sars virus outbreak in 2003.

"We have been planning how to change working practices to respond to a possible pandemic," a company spokesman said.

The firm is preparing for staff to work from home, or via video link and teleconference facilities.

It also plans to clean offices every hour in an attempt to limit the possibility of infection, something done in its offices during the Sars outbreak.

That cost China and other East Asian economies billions of dollars as people stayed away from public places such as shops, restaurants and transport systems.

Many fear a similar scenario if there is a flu pandemic, with the Asian Development Bank (ADB) putting the potential cost to the region at between $99.2bn and $282.7bn in lost consumption, trade and investment.

An additional $14.2bn could be lost through staff incapacity and death.

The ADB believes a pandemic could hit the region harder than anything since the 1997 currency crash.

And Citigroup in Singapore estimates an outbreak could shave 5% off GDP in Asia - with international trade hit by quarantines.

Contingency plan

Economically, Hong Kong, Singapore and China are the most vulnerable because they rely on trade and tourism and have large, dense populations.

Major cities like Tokyo, which rely on mass transport systems, could also see commerce affected.

In the second quarter of 2003, the Sars outbreak caused tourist arrivals in Hong Kong to fall 58% year-on-year and GDP to decline by 6.4%, according to Hong Kong brokerage CLSA.

Having learned from that experience, the Hong Kong government has developed a detailed contingency plan to deal with different bird flu scenarios.

And the WHO is holding a two-day conference in Tokyo to look at ways to prepare Asia for a potential pandemic.

Quickly spread

But even if a new flu strain does emerge in the region first, it appears there is little that can be done to prevent the global effects spreading.

"It doesn't matter where a pandemic starts, be it Vietnam or elsewhere," says Dr Blake.

"The epidemiologists are saying it would spread quickly round the world. In the UK, that would mean tourism being badly affected."

As yet, there is no sign of a new strain that can be passed from human to human, without which a pandemic is impossible.

But the threat is bound to exercise health, business and economic thinkers in months to come.