August 26, 2005

Investors warned that avia flu pendemic is a risk factor

by brian_turner

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A report from BMO Nesbitt Burns, a Canadian bank, claims that a global outbreak of avian flu could cause severely affect the economy. It suggests that the financial effect could exceed that of the 2003 Sars epidemic, estimated to have cost $30bn.

Discovery of the virus in Siberia has increased concerns about its further spread. It is thought that the virus, which can pass from animals to humans, could be spread from Russia by wild migratory birds.

The World Health Organization estimates that a pandemic could kill up to 50 million people.

Donald Coxe, global portfolio strategist at BMO Nesbitt Burns and author of â€˜An Investor’s Guide To Avian Fluâ€™, said an outbreak in East or South East Asia would seriously affect the global economy because so many goods are sourced there.

He said its further spread could cause airplane traffic around the world to shut down, leading to the closure of production lines due to a failure of distribution of parts and materials.

Mr Coxe suggested that the economic effect would be exacerbated by the fact that a pandemic would affect the most economically productive 20-40 age group.

Mr Coxe advised investors and businesses not to panic, but suggested that a pandemic should be considered a risk factor.

Risk management experts said they did not believe the threat of avian flu to the world economy was an immediate one.

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