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Bird flu and the stock market

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Global economic analysis

The threat of a human flu variant developing from bird flu remains high and could pose a severe risk to human life and the global economy. The impact of a bird flu pandemic on the worlds' stock markets and global gross domestic product (GDP), especially through the effect on discretionary spending and trade, may be substantial compared with the SARS outbreak in 2003.

The general slowdown in economic activity would reduce GDP. Business confidence would be dented, the supply of labor would be restricted owing to illness, mortality, and absenteeism spurred by fear of contracting the disease, supply chains would be strained as transportation systems were disrupted, and arrears and default rates on consumer and business debt would probably rise somewhat.

It seems quite likely that following an outbreak of bird flu the stock market would fall initially and then rebound later, as it did in Hong Kong during the SARS episode.

A report on the threat of bird flu by Oxford Economic Forecasting (OEF) said the following:

Even if bird flu is confined to the bird population, the effects are likely to be significant, given the size of the poultry farming industry and the resulting disruption in agricultural trade.

A virulent human-to-human flu would spread rapidly around the world, even if restrictions were quickly imposed on movements of people and goods. According to OEF, the number of cases--as a percentage of the population--could be anywhere from 10% to 50%, while mortality rates are expected to be higher than those for a "normal" flu outbreak (one fatality in 500 cases).

The impact on consumer spending and trade may be large, even if human cases and death rates are low.

A global flu pandemic may endure for up to two years. According to simple estimates, based on a pro rata extension of the SARS impact over half a year, a serious pandemic could damage economies by a minimum of 1% of GDP in the first year. However, the impact on GDP is likely to be more than a simple multiple of SARS.

Despite significant health care costs and losses to the poultry industry, the dominant impact on GDP of a global flu pandemic will be through the demand response and, to a much lesser extent, the effect on output:

Perceptions of risk may lead to significant and immediate reductions in discretionary spending--particularly in the travel and tourism sector (a global industry worth around 4% of the global GDP)

The report highlights the potentially large "trade multiplier effects" (i.e., income reductions caused by falling exports) of the initial demand losses worldwide. As the outbreak spreads, the trade multiplier effect will increase.

On an annual GDP basis, the direct impact of the "loss of life" (incorporating measures of lifetime earnings) on economies will not be large compared with the impact of perceptions of risk in the short term. However, the OEF suggests that a loss in population of, for example, 1% may cut annual potential output between 0.5% and 1% of GDP per year.

If case numbers became substantial, workforce shortages would occur in the short term, reflecting the percentage of workers absent. If 20% to 25% of the population became infected, this might lead to an average shortfall of 1% of the labor force over one year.

According to OEF estimates, the annual cost could easily rise to more than 5% of the world GDP, representing losses of about $2 trillion per year.

However, the response to a potential pandemic--and the resulting impact on GDP, may not be as large as the estimates suggest. Reductions in travel in areas exposed to risk may be compensated by expenditures on other goods. Moreover, spending may be diverted to servicing debt or increasing saving.

A global pandemic will have a substantial impact on discretionary spending and global trade in services, especially tourism and travel--beyond estimates suggested by a simple extrapolation of the SARS outbreak. While there is little doubt that a human flu outbreak will be global, its effects will largely depend on the response of consumers and investors to the perceived risk, as well as policymakers' attempts to stem the outbreak.

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bird flu stock market - Google News
Avian flu at Sovereign a game changer, says CBH - Business Day (registration) Mon, 18 Sep 2017 03:51:46 GMT

Business Day (registration)

Avian flu at Sovereign a game changer, says CBH
Business Day (registration)
Country Bird Holdings (CBH) looks set to abandon its second bitterly fought attempt to get control of Sovereign Foods, with CBH CEO Marthinus Stander expressing concern on Friday about the possible effect of avian flu on Sovereign's Uitenhage ...

Avian flu wipes out farmer's business, workers' livelihoods - Independent Online Wed, 06 Sep 2017 05:39:19 GMT

Independent Online

Avian flu wipes out farmer's business, workers' livelihoods
Independent Online
But one strike of avian flu not only killed 36 000 ducks but a business and the livelihood of many families. Leon Groeneveld, owner of The Duck Farm, which provided duck meat products and eggs to the market, is devastated. “We lost 10 917 to bird flu ...

Darling Ingredients Inc. Announces Fire Incident At Rendac Operation In Son, The Netherlands - MarketWatch Tue, 19 Sep 2017 21:03:30 GMT

StreetInsider.com

Darling Ingredients Inc. Announces Fire Incident At Rendac Operation In Son, The Netherlands
MarketWatch
... the occurrence of Bird Flu including, but not limited to H5N1 flu, bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere; unanticipated costs ...
Darling Ingredients Inc. - DAR - Stock Price Today - ZacksZacks Investment Research

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Zimbabwe: Bird Flu - Government Okays Hatching Egg Imports - AllAfrica.com Wed, 06 Sep 2017 10:00:21 GMT

Zimbabwe: Bird Flu - Government Okays Hatching Egg Imports
AllAfrica.com
"We are running short of day- old chicks but starting September 16, we will be importing hatching eggs from Europe because the breeders and layers stock has been affected by bird flu. All major poultry breeders got import permits from the Ministry of ...

Surging onion, egg, squid costs spice up Asian inflation outlook - THE BUSINESS TIMES Wed, 20 Sep 2017 22:43:00 GMT

Surging onion, egg, squid costs spice up Asian inflation outlook
THE BUSINESS TIMES
Egg prices rose 53 per cent in August from a year earlier, impacted by a bird flu outbreak in late 2016 and early 2017 that sparked mass poultry culling. Officials don't expect the gains to persist. The central bank said in an August statement that ...

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Opinion: It's time to vaccinate your investments against a deadly bird flu - MarketWatch Tue, 14 Mar 2017 09:21:02 GMT

MarketWatch

Opinion: It's time to vaccinate your investments against a deadly bird flu
MarketWatch
While a widespread outbreak is unlikely, this virus could potentially grab headlines over the next few months and spook the markets, just as various forms of bird flu have in the past. So it's worth taking a few steps to inoculate your portfolio now by ...
China bird flu death toll rises to 161 for winter, in worst outbreak since 2009South China Morning Post

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AGIC attracts nearly 900 delegates - World Grain Thu, 21 Sep 2017 16:17:09 GMT

World Grain

AGIC attracts nearly 900 delegates
World Grain
2-3 in Melbourne for the annual Australian Grains Industry Conference (AGIC) and listened to presentations on familiar topics such as the industry's outlook, supply chain efficiency, and capturing Asian market opportunities. New to the agenda this ...

South Korea lifts ban on US poultry - Far Eastern Agriculture Mon, 28 Aug 2017 06:47:54 GMT

Far Eastern Agriculture

South Korea lifts ban on US poultry
Far Eastern Agriculture
Our hope is that Korean officials will recognize that our system works and will move towards a regional approach in the event of any future findings of bird flu,” said U.S. Agriculture Secretary Sonny Perdue. “South Korea is one of our best trading ...

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Where can you get the cheapest groceries in Charlotte? We compare prices at 9 stores - WBTV Wed, 30 Aug 2017 19:00:39 GMT

WBTV

Where can you get the cheapest groceries in Charlotte? We compare prices at 9 stores
WBTV
Food prices have fallen across the board over the last three years at Charlotte's four biggest grocers by market share: Harris Teeter, Walmart, Food Lion and Publix, according to an Observer analysis of 14 common grocery items. Prices fell the most at ...

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166th Ashland County Fair opens Sept. 17 - Columbus Alive Wed, 13 Sep 2017 21:36:17 GMT

Columbus Alive

166th Ashland County Fair opens Sept. 17
Columbus Alive
With swine flu and bird flu troubling county fairs in recent years, Englet said adding the new restroom near the barns offers a convenient opportunity for the Junior Fair kids and all fair visitors to wash their hands with soap and water instead of ...

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