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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
This RSS feed URL is deprecated Sun, 18 Feb 2018 22:16:12 GMTThis RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
HONG KONG PRESS: News Headlines On Thursday, February 15 - Nikkei Asian Review Thu, 15 Feb 2018 00:55:21 GMT

Business Recorder

HONG KONG PRESS: News Headlines On Thursday, February 15
Nikkei Asian Review
Mainland China has confirmed the world's first human case of a virulent bird flu strain, prompting Hong Kong's Centre for Health Protection to issue an alert for the city. The centre said health authorities confirmed this month that a 68-year-old woman ...
CHP notified of human case of avian influenza A (H7N4) in Mainland - GovHKGovHK

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Quickly catch up on the day's news: Tuesday, February 6 - CNN Tue, 06 Feb 2018 21:44:25 GMT

CNN

Quickly catch up on the day's news: Tuesday, February 6
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... guards fell sick from a norovirus outbreak at Winter Olympic facilities. -- Poland's president said he will sign a controversial Holocaust bill that will make it illegal to accuse the nation of being complicit with Nazi Germany. -- A contractor ...

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Bird flu makes poultry buyers 'nervous' - FG Insight Sat, 03 Feb 2018 06:44:08 GMT

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Bird flu makes poultry buyers 'nervous'
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Aethlon Medical Announces Fiscal 2018 Third Quarter Results - Markets Insider Fri, 02 Feb 2018 07:02:39 GMT

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Analyst IMS Investment Management Services Ltd. Increases Position in Starbucks Co. (SBUX) - ClickLancashire Sun, 18 Feb 2018 05:44:40 GMT

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Analyst IMS Investment Management Services Ltd. Increases Position in Starbucks Co. (SBUX)
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Poultry industry on the rebound - The Zimbabwe Standard Sun, 04 Feb 2018 03:25:24 GMT

The Zimbabwe Standard

Poultry industry on the rebound
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THE poultry industry in Zimbabwe, which nearly got decimated by bird flu last year is on a recovery path, but is seriously weighed down by the prevailing high cost of stockfeed which has pushed small-scale producers out of business, farmers have said ...

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

South China Morning Post

Opinion: It's time to vaccinate your investments against a deadly bird flu
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Plus, viruses can quickly travel and pop up in new parts of the world at any time. 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 ...
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Ship Finance International Limited (SFL) EPS Estimated At $0.23; Shorts at Nanoviricides (NYSEAMERICAN:NNVC ...
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Centre confirms outbreak of bird flu in Bengaluru - Moneycontrol.com Fri, 05 Jan 2018 14:33:33 GMT

Moneycontrol.com

Centre confirms outbreak of bird flu in Bengaluru
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An outbreak of avian influenza, also called bird flu, has been reported from Dasarahalli village in Bengaluru, the government confirmed on Friday, adding that a central team has been deputed to assist Karnataka. PTI @moneycontrolcom. An outbreak of ...
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Avian flu scare hits city - The Hindu Tue, 02 Jan 2018 16:31:26 GMT

Avian flu scare hits city
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This comes after a gap of more than five years with bird flu last reported in the city in October 2012. Following the confirmation, all chicken stalls in Dasarahalli were immediately shut down to prevent spread of the virus, and measures are being ...

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