Environmental Engineering Reference
In-Depth Information
absenteeism of otherwise healthy workers) and demand shock (due to reduced
consumer confidence and activities). The impact of the pandemic on demand, though,
may not be always negative. as happened with the bubonic plague, with a high attack
rate and a high cFr, people in the affected regions may discount their future so
heavily that they adopt a today-we-drink-for-tomorrow-we-die attitude, leading to an
increase in consumer demand (Hays 1998). also, the longer the psychological impact
of the outbreak lasts, the more significant reduction it may cause in consumption and
export of services (as consumers in directly affected countries reduce their activity,
and as the rest of the world reduces its consumption, affecting trade and investment).
assuming that the psychological impact of the outbreak lasts longer and seriously
affects demand for one year, the asian Development bank (aDb) placed the
estimated loss of nine asian economies at approximately 6.5 percentage points of
GDP in 2006, which means that growth in the region would essentially come to an
abrupt halt (bloom, de wit, and carangal-San Jose 2005).
A battered regional economy will result in significant disruptions to the highly
integrated global economy. Difficulties in trade and travel are likely to interrupt the
flow of goods and services, 'with cascading effects in industries with tightly linked
supply chains that depended heavily on supplies in the affected countries' (newcomb
2005). Indeed, most of the cost of the SarS epidemic was incurred not by its direct
economic impact (i.e., the medical treatment costs and lost productivity associated
with absenteeism) but by the indirect economic impacts such as disruption of trade,
travel, and investment, the interruption of product supply lines, and fear-induced
behavioural changes in consumers, travellers, and businesses (newcomb 2005). a
well-connected world economy is very sensitive to exogenous shocks. according to
the aDb, if a disease outbreak leads to the shut-down of the asian economy, global
GDP will contract 0.6 percent and the global trade of good and services will shrink
about 14 percent (with a total cost of $2.5 trillion) (bloom,
de wit, and carangal-San
Jose 2005, 5). with foreign companies shifting manufacturing to china that country
has become a workshop for the world. a world economy that depends so heavily on
china as an industrial lifeline can become increasingly vulnerable to a major supply
disruption caused by a pandemic outbreak in this country.
additional secondary effects on the economy are equally important. First, if
people avoid social contact, epidemics could adversely affect labour productivity due
to restricted labour mobility (which inhibits labour from moving to where it is most
productive) (Jong-wha lee and McKibbin 2004, 95). Second, fear and uncertainty
may lead people to rush to purchase daily necessities, and this panic buying
threatens to trigger a 'bank run' that could disrupt seriously a country's financial
industry. third, it is likely that government and international response to the disease
(e.g., quarantines, import bans) exacerbates the economic impact by sustaining
the psychological impacts and reinforcing a tendency for markets to overreact. If the
pandemic lasts longer than a year, quarantines could lead to widespread business
failures, mass unemployment, and further decline of consumer demand.
The impact of pandemic influenza is unlikely to be the same for all economies.
Quarantine-induced economic shocks in an affected country, for example, may
