THE $2 TRILLION BIRD FLU PANDEMIC

BIRD FLU FATALITIES HAVE TRIPLED IN 2006

Bloomberg is running with a story that says the World Bank has released a report estimating that a worldwide bird flu pandemic that kills 70 million would inflict a global economic loss worth some $2 trillion.

A slump in tourism, transportation and retail sales, as well as workplace absenteeism and lower productivity, may cause the world economy to shrink by 3.1 percent...

The (World Bank) study predicted a surge in corporate bankruptcies in companies with a high level of debt to equity, such as airlines.

The Bank, which funds projects to alleviate poverty, is working with developing countries to improve hospitals and laboratories to bolster disease surveillance and management of bird flu. Human fatalities from the H5N1 avian influenza strain have almost tripled this year, providing more chances for the virus to mutate into a lethal pandemic form.

Since January at least 54 people have died from H5N1 as the virus spread in wild birds and domestic poultry across Asia, Europe and Africa. That compares with 19 fatalities in the first six months of 2005. In the past three years, at least 130 of the 228 people known to have been infected with H5N1 have died, according to the World Health Organization.

The most immediate and largest economic impact of a pandemic might arise from the uncoordinated efforts of people to avoid becoming infected, not from actual death or sickness...

The World Bank study assumes 20 percent declines in demand for tourism, transportation and other key services, which reduce global GDP by about 2 percent. The economic losses could range from $1.25 trillion to $2 trillion, according to the report.

Besides the immediate costs of disruption, a severe global flu pandemic could slash the size and productivity of the world labor force because of illness and death. The effect of the disease on the labor force would depend on factors including the virulence and spread of the disease and its impact on different age groups, Brahmbhatt said.

The Bank's scenario of a severe pandemic assumes about 35 percent of people worldwide would be infected. Of those, 3 percent, or about 70 million people, may die.

So what about the economic impact should those 'worst case' estimates of 150 million deaths, or more, made by the World Health Organisation late last year come true?

The more financial institutions like the IMF and World Bank sound the alarm about pandemic bird flu, the harder it becomes to ignore the truth that we are going to get hammered hard when, not if, the pandemic finally breaks out.