This report is available on www.wachovia.com/economics and on Bloomberg at WBEC
April 28, 2009
Economic Effects of Swine Flu: Mexico and Beyond
Jay H. Bryson, Global Economist
The swine flu epidemic has become front page news this week. Mexico is the
epicenter of the outbreak and thousands of cases have been reported in that country.
However, scores of cases have been confirmed in the United States, and countries as
far afield as Israel and New Zealand have hospitalized people with symptoms that
resemble swine flu. Not only have the Mexican stock market and currency been
hammered over the past few days, but financial markets in most other countries have
been adversely affected as well.
The financial and
economic costs of the
ultimately depend on
The financial and economic costs of the epidemic will ultimately depend on its
severity. The outbreak of Severe Acute Respiratory Syndrome (SARS) that swept
through Asia in the spring of 2003 is instructive. The SARS epidemic was deadly—
nearly 800 people in 7 countries died—but it was not catastrophic. The economic
effects of that epidemic were significant but temporary. However, if the current
outbreak were to morph into something like the influenza pandemic of 1918, which
killed 50 million people worldwide, the economic and financial fallout would
obviously be much more devastating.
In this brief note, we attempt to outline how the economies of Mexico and other
countries could be affected by the current outbreak of swine flu. In that regard, we
draw on the experience of the 2003 SARS epidemic to inform our economic prognosis
and we reference some analytical work that has modeled the economic effects of
severe pandemics. We acknowledge, however, that it is ultimately impossible to
forecast precisely the economic and financial effects of the current outbreak due to
the unpredictable nature of the epidemic.
Significant, But Temporary, Economi