Just what the economy doesn’t need: a major health threat.
So far, the swine-flu outbreak has been fairly mild, with about 1600 cases reported in Mexico, but spring-break trips may have transported the virus to the US, Israel, and even New Zealand.
Last year a World Bank report claimed that a pandemic could cost the global economy $3 trillion and could trim 5% from global growth. For what it’s worth, the IMF predicts a 1% economic decline this year. A 6% global decline would be a disaster.
While it’s likely that the IMF report is too gloomy, a global pandemic would certainly hurt. So what are its chances? Health-care surveillance has advanced tremendously in recent years, especially in light of the bird-flu dress-rehearsal of a couple years ago. My Impression is that our health-preparedness is good. But that does preclude a “Bay-of-Pigs” like problem.
Douglas R. Tengdin, CFA
Chief Investment Officer
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