Economic Issue of the Day
Philippine Institute for Development Studies S u r i a n s a m g a Pa g -a a ral Pangkaunlaran ng Pilipinas
Vo l . V I N o . 4 ( J u l y 2 0 0 6 )
The avian flu and its implications
M
ere months after the successful containment of severe acute respiratory syndrome (SARS) comes another controversial public health crisis. The recent avian flu scare raised warning bells in the health department as well as in the economic arena. Health officials around the world are increasingly concerned of the possible deadly outbreak of flu on a huge scale. The cause of alarm stems from the fact that the bird flu or the H5 avian influenza has now crossed species barrier and has infected humans. The World Health Organization (WHO) already confirmed 176 human cases and 97 human deaths since the virus re-emerged in 2003 and the figure is steadily climbing. They reported that the world is already at level 3 in the interpandemic phase or the level of pandemic alert (see Table below). Hence, it is predicted that it is just a matter of time before (not if) the new strain develops and a flu pandemic begins.
What is bird flu? Bird flu, also known as the avian flu, is a type of influenza that describes the influenza viruses that originate from birds. It occurs among wild birds such as ducks, and domestic birds such as chickens. Many forms of avian flu cause only mild symptoms like irregular and rough feathers and drop in egg production among birds. However, some viruses produce a highly contagious and rapidly fatal disease. These virulent viruses are scientifically known as “highly pathogenic avian influenza” or H5N1 and are currently infecting chickens in Asian countries. Until 1997, the avian flu was believed to only infect birds. Recently, however, it was discovered that the virus can occasionally infect people who have been in close contact with live birds or those who are working in farms. This rare ability of avian flu virus to infect humans (known as ‘species jumping’) raises a worrying possibility that a highly pathogenic avian flu virus could merge with a human flu virus and lead to a new virus that could be easily passed between humans. If so, this could lead to the next flu pandemic. Outbreaks of the highly pathogenic avian influenza H5N1 strain of virus were found among poultry flocks in eight Asian countries (Cambodia, China, Indonesia, Japan, Laos, South Korea,
Thailand, and Viet Nam) in the late 2003 and early 2004 periods. At that time, it was estimated that more than 100 million birds in the affected areas either died from the disease or were killed in order to try to contain the outbreaks. The H5N1 strain has also been reported among wild migratory birds in China, Croatia, Mongolia, and Romania. New outbreaks of H5N1 influenza among poultry have been reported in several countries in Asia and Eastern Europe (Cambodia, China, Indonesia, Kazakhstan, Malaysia, Mongolia, Russia, Siberia, Tibet, Thailand, Turkey, Romania, Ukraine, and Viet Nam) since late 2004. There is reason to believe that these outbreaks are ongoing and are not expected to diminish significantly in the short term. Very likely, the H5N1 infection among birds has become endemic in certain areas and human infections resulting from direct contact with infected poultry will continue to occur (CDC 2006). Currently, the avian flu virus is not easily transmitted from human to human. Clinical experts, though, have already opened the possibility that the virus can acquire the ability to spread from human to human due to some reports originating in Viet Nam claiming rare but significant occurrence of the avian flu
WHO phases of pandemic influenza Interpandemic phase
Low risk of human cases
1
New virus in animals, no human cases
High risk of human cases
2
Pandemic alert
No or very limited human-to-human transmission Evidence of increased human-tohuman transmission
3 4
New virus causes human cases
Evidence of significant human-tohuman transmission
5
Pandemic
Efficient and sustained human-tohuman transmission
6
Source: Current WHO phase of pandemic alert [online]: (http://www.who.int)
Economic Issue of the Day
AVIAN FLU
Vo l . V I N o . 4 ( J u l y 2 0 0 6 )
virus transmission from human to human. If the reports are proven accurate and the occurrence continues, then it poses an important global public health threat. H5N1 has not yet been reported in the Philippines. However, reports of human victims and death incidence in neighboring countries, particularly Southeast Asia and southern China, should increase the level of awareness and alertness of all Filipinos. The virus is ominously spreading in Europe and has now been reported for the first time in Africa.
Threat to the economy: the challenge posed by a possible pandemic A scientific report gives a fearful assessment of the huge impact a pandemic could have on the world, with an estimate of two to seven million people dying in the first few months (WHO 2006). It could change the world ‘overnight’ and could be worse than previous outbreaks because of the greater interlinkages of modern life system. The SARS outbreak showed how the effect of health could have magnifying effects for the economy. The aftermath of the SARS outbreak killed only 10 percent of the infected people but the estimates of the Asian Development Bank (ADB) of the economic impact in East Asia was around $18 billion, approximately 60 percent of the total gross domestic product (GDP) of the region (Fan 2003). Avian flu, in its early stages, already caused significant damage to the agricultural sector, particularly poultry production. The direct cost to the livestock sector is expected to rise substantially with the loss of trade. A possible policy directive banning the importation of chicken could lead to significant changes in consumer behavior—imagine “life without chicken.” Unlike natural disasters or terrorism, pandemics are prolonged and pervasive so the net economic loss is substantial and extended. An ADB study noted the possible effects of such on both the demand and supply side (Bloom et al. 2005). On the demand side, a pandemic is likely to affect consumption and investor
confidence. This reflects the psychological impact of the outbreak. This was said to be the more prevalent effect during the SARS outbreak. On the supply side, a pandemic is likely to affect the availability of labor where labor supply is expected to fall as the number of sick people increases. The effects of both the demand and supply impacts, when taken together, bring to mind an uncertain policy environment even as the government will try to respond to public health and economic dislocation. In 2004, the governments of infected regions took action to cull and destroy poultry at their own risk but the reappearance of the virus in 2005 indicates that this action was not sufficient. A pandemic outbreak is believed to be a major market event. The poultry industry is the immediate loser and the ancillary businesses that would be affected are tourism, travel and transport sectors, life and health insurance markets, theaters, casinos, sports facilities, spectator sports, convention halls, malls, restaurants, retailers of nonessential goods, and producers of nonessential services such as dental clinics and salons. The challenge posed by a possible pandemic is burdened with uncertainty. Pandemic planning requires involvement of the entire government and society. In particular, the government's role is in looking after the public health and instituting risk management measures in the poultry and livestock sector. ❋
Sources Centers for Disease Control and Prevention (CDC). 2006. Fast facts on avian flu [online]. Available from the World Wide Web: (http:/ /www.cdc.gov). World Health Organization. 2006. Avian influenza frequently asked questions [online]. Available from the World Wide Web: (http:/ /www.who.int). Bloom, E., V. De Wit and M.J. Carangal-San Jose. 2005. Potential economic impact of an avian flu pandemic on Asia. ERD Policy Brief Series No. 42. Manila: Economics and Research Department, Asian Development Bank. Fan, E. 2003. SARS: economic impact and implications. ERD Policy Brief No. 15. Manila: Economics and Research Department, Asian Development Bank.
The Economic Issue of the Day is one of a series of PIDS efforts to help in enlightening the public and other interested parties on the concepts behind certain economic issues. This dissemination outlet aims to define and explain, in simple and easy-to-understand terms, basic concepts as they relate to current and everyday economics-related matters. This Issue was written by Maria Christina B. Jolejole, research analyst at the Institute. She is grateful to Dr. Vincent De Wit and Ms. Mary Jane Carangal-San Jose, senior health specialist and economic officer, respectively, at the Asian Development Bank for their valuable comments. The views expressed are those of the author(s) and do not necessarily reflect those of PIDS. ❋ Philippine Institute for Development Studies NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, Makati City z Telephone Nos: (63-2) 8924059 and (63-2) 8935705 z Fax Nos: (632) 8939589 and (63-2) 8161091 URL: http://www.pids.gov.ph