Five year old Edgar Enrique Hernandez in Mexico was the first confirmed case of H1N1 on April 2. “Swine flu” has now spread around the world, and by May 25 more than 12,000 people were confirmed to have contracted H1N1 influenza in 43 countries. 86 people have died.
Eighteen US soldiers in Kuwait were the first confirmed cases of swine flu in the Gulf Cooperation Council in mid-May. Around the same time, an Emirati citizen was diagnosed with the flu after having traveled to Canada and back. He became the first confirmed case of a GCC national contracting the virus.
In another a sign of the growing fear in the region, a journalist from Executive was even briefly detained by Syrian medical personnel as he was recently leaving Lebanon and examined for symptoms of influenza.
How these cases will affect the regional economy has yet to be seen, but the flu has already had severe economic consequences for Egypt, where pig farmers paid the biggest price for the outbreak (also read “A poor cull in Egypt” in the Comments section).
Economic costs of a pandemic
Mexico has felt the devastating economic cost of the influenza pandemic. In April, a five day suspension of all “non-essential” activities around the country occurred, creating dramatic sights of empty streets and football teams playing to empty stadiums. The economic cost was as much as $57 million per day in lost revenue, according to Mexico City’s Chamber of Trade, Services and Tourism. The peso also fell 4 percent against the dollar and the local stock market fell 3 percent. As for the vital summer tourist season, there is little hope of gaining anywhere near the $40 billion earned in 2007.
If the Mexican experience was repeated globally the economic consequences would be devastating. The World Bank predicts that if an outbreak similar the devastating 1918 epidemic — which killed more people than World War I — occurred now, then the global gross domestic product could shrink by 4.8 percent and cost $3 trillion. The most telling account of the possible economic cost is the SARS epidemic. Warwick McKibbin, an international economics expert at the Brookings Institute, argued that the SARS epidemic in 2003 cost the world $40 billion due to canceled flights, closed schools and panicked Asian markets. And that was a relatively short lived outbreak. McKibbin said a serious swine flu outbreak could be much worse.
“A mild scenario would cost the global economy about $360 billion and an ultra scenario up to $4 trillion within the year of the outbreak,” he said. “The mild scenario is estimated to cost the world 1.4 million lives, and close to 0.8 percent of gross domestic product and [approximately $330 billion] in lost economic output.”
McKibbin said that as the scale of the pandemic increases, so would the economic costs. In the most extreme, “ultra” scenario,” a flu based massive global economic slowdown “would kill more than 140 million people and cost the world economy $4.4 trillion.”
Already the H1N1 has had global economic consequences that have only added to the difficulties countries are facing with the global economic crisis. The economic and human cost of a full scale influenza pandemic would be frightening, but it is fear that is currently having the greatest affect on the global markets. The H1N1 virus has already made a significant impact on a fragile global economy. When news broke out about swine flu, tourism and airline companies stocks dropped steeply: British Airways stock fell nearly 17 percent, Lufthansa’s dropped by 12 percent at one point. Oil prices also slid in the wake of swine flu.
Possible affect on the MENA Economy
Officials in the Middle East and North Africa are taking steps to prevent swine flu from spreading (see box for full list of measures). It began with a GCC emergency meeting in Doha on May 2 that discussed ways to effectively face the dangers of the flu. Saudi Arabia and the United Arab Emirates also imported thermal monitors to scan airline passenger’s body heat for abnormally high temperatures.
When laboratory tests came back positive for the Emirati citizen traveling from Canada, the UAE Ministry of Health was quick to calm fears the flu might have spread to other passengers on the flight.
“Passengers who were on the same flight have not developed any H1N1 symptoms,” said Haneef Hassan, the UAE Minister of Health, according to Arabian Business.
“The patient, who arrived to the country on a flight from Canada, is recovering now at a government hospital after he has received a course of treatment,” Hassan said. “He will remain under observation and treatment for 10 days as medically recommended.”
The US troops diagnosed with H1N1 in Kuwait were put under immediate quarantine, Kuwaiti officials said, adding they had left the country.
Yussef Mendkar, deputy chief of Kuwait’s public health department, said the troops “had no contact whatsoever with the local population,” and that Kuwait was free from the virus.
News agencies reported that the infected troops did not leave their base, located far from any population centers, and anyone who had contact with the infected troops had been put under medical observation.
The Kuwait and Dubai experiences highlight a huge issue in the GCC: whether it’s US troops, locals traveling abroad, transit passengers or the enormous migrant worker population, the region is highly exposed to a possible H1N1 outbreak.
But analysts say that with the measures taken by the region’s health officials, the flu’s economic impact on the region will be likely be from psychological reasons rather than physiological.
“I don’t think local investors have a coherent view of the likely impact of swine flu, but it’s more of a sentiment issue with regional stocks closely correlated to international markets,” Jithesh Gopi, head of research at Bahrain-based SICO investment bank, told Trade Arabia. “The flu scare will have a bigger impact on the stock markets than it will on the real economy.”
And although the flu might represent an apocalyptic scenario to some, to others it’s been a boon to business.
A mild Swine Flu scenario could cost the global economy $360 billion — ultra scenario $4 trillion
The profiteers of pandemic
To try to avoid getting hit by the flu, people around the world are taking precautions, like buying surgical masks, hand and surface sanitizers, flu kits and drugs. Some surgical mask manufacturers had to double production to keep up with demand.
“We’re operating at full tilt to try and produce as many masks as we can to take care of as many people as we can,” Andrew Whitehead, spokesman for surgical mask manufacturer Crosstex company, based outside New York City, told the Long Island Business News on April 30.
Whitehead told the paper that Crosstex had received orders for around 10 million face masks in the first days of the H1N1 outbreak, an amount the company said it usually handles in a month.
“Masks are going to hospitals, government agencies, the Mexican government,” said Whitehead. “We got a lot of requests from China, Australia, Europe, South America and, of course, Mexico.”
Pharmaceutical companies producing drugs for the flu have also seen positive market reaction as governments stockpile the drug. Tamiflu, produced by Roche, and Relenza, produced by GlaxoSmithKline (GSK), are the two biggest companies.
Roche saw its shares rise 6 percent, while GSK saw a 5 percent rise. Although both Tamiflu and Relenza are not vaccines, they have both shown to be an effective treatment against H1N1, but only if used within 48 hours of the symptoms developing
“Roche actually lowered production of Tamiflu due to a lack of demand in 2006,” said Martina Rupp, a spokesperson at the Roche Group.
Even more ironic is that the first quarterly report for Roche stated that they reported lower than normal seasonal Tamiflu sales in the US as outbreaks were less severe. Roche will not have to worry about lack of demand however.
In the US alone, health care marketing consultants SDI released data showing more than 250,000 prescriptions for Tamiflu pills alone were filled at retail US pharmacies in the last week of April, according to the Associated Press.
That’s figure was 34 times higher than just a week before and represented more than double the number of prescriptions from the 2008 winter flu season.
Relenza prescriptions saw a similar increase, multiplying 10 times in one week at the end of April, SDI data also showed.
Governments are also building up their stockpiles of Tamiflu. Roche said governments have built up enough stores of Tamiflu to treat roughly 220 million people. GSK declined to give out information on how many doses governments are purchasing. As governments build up their stockpiles of Tamiflu and Relenza they are doing well at being cautious about not creating an atmosphere of panic while confronting swine flu.
Should we worry?
Compared to common seasonal influenza (the flu) that causes 36,000 deaths per year on average in the US alone, the 86 deaths from H1N1 should not be cause for concern. Yet, the world’s epidemiologists have been on edge even since the H1N1 strain showed up in Mexico, and it’s also caused panic and a media storm throughout the world.
The fear of scientists is that the H1N1 strain of influenza is new. According to the World Health Organization (WHO), this means that “scientists anticipate that pre-existing immunity to the virus will be low or non-existent.”
Currently, the WHO has raised the pandemic alert to level five out of six for the H1N1 strain of the virus. According to the WHO, “the declaration of phase five is a strong signal that a pandemic is imminent.”
Causing panic or fair warning?
Governments are concerned about the fear that has been sparked by the WHO’s warnings about the virus. As considerations are under way by the WHO as to whether to raise the alert to phase six, declaring the first pandemic in 40 years, governments are urging caution. Currently governments are concerned about the misunderstanding of the levels of alert and want the WHO to take into consideration how deadly a virus is in its criteria and not just, as happens currently, how far it spreads, so as not to cause undue panic.
