Misinformation about avian flu is triggering unnecessary fear and economic cost, according to Sherry Cooper, chief economist of BMO Nesbitt Burns.

Although avian flu is spreading rapidly in the bird population, it is still extremely difficult for humans to become infected. Human infection generally requires direct exposure to sick or dead poultry. This is most likely in areas where birds live in close contact with people – generally in parts of Asia, Africa and the Middle East.

A human H5N1 pandemic, if it were to occur, would likely be triggered in the emerging world, rather than in Europe or North America.

In her report titled The Avian Flu Crisis: An Economic Update, Cooper explains that pandemics are prolonged and pervasive, so the net economic loss is substantial and extended. She states that an avian flu pandemic would lead to considerable supply and demand effects. Widespread absenteeism and trade disruption would dominate the supply-side effect, and social distancing and fear would initially increase the demand for essentials such as non-perishable food, water, medical supplies and health-care services, but reduce the demand for virtually everything else.

Global health-care systems would be running beyond surge capacity, Cooper suggests. Shortages of key medical equipment, supplies and trained personnel would be likely. And we could suffer prolonged outages of power and utilities and disruptions in government services. Preparation is the key to managing such debilitation, says Cooper.

“Government, business, individuals and public health offices must further refine and develop continuity and preparedness plans and test and retest these plans as well as revise them as the situation changes,” she urges.

Cooper suggests that the economic slowdown in Asia that would result from pandemic would markedly reduce the demand for commodities and industrial materials, driving prices downward. This would have a particularly negative impact on commodity-producing countries like Canada.

Athough people cannot contract H5N1 by eating fully cooked poultry, the poultry industry is already taking a big hit, especially in Europe, Cooper notes. In the United States, the US$30 billion poultry industry has already suffered, as exports dropped 28% in December.

In addition to the poultry industry, immediate losers would be tourism, travel and transport sectors, the hospitality industry, public transportation, and life and health insurers.

Cooper’s economic model predicts that a mild pandemic would reduce annual global GDP growth by 2 percentage points from what it would otherwise be. A severe pandemic, similar to the 1918 Spanish flu, would reduce global GDP growth by 6 percentage points. She considers the results to be “low-ball” global estimates as the economic model assumes all countries are impacted equally.

“It’s important to know, though, that even with a severe pandemic, roughly 99% of the world’s population would survive, and travel and trade would recommence as economic activity rebounds.” concludes Cooper.