The world's biggest risks

Amid Ebola crisis, is something worse around corner?

Dhara Ranasinghe | Special to
In this handout from the Center for Disease Control, a colorized transmission electron micrograph (TEM) of a Ebola virus virion is seen.
Center for Disease Control | Getty Images

The worst outbreak of Ebola to date serves as a timely reminder of the threat deadly viruses pose to the world economy.

Border closures, the suspension of some international flights and slowed economic activity have already hit the west African countries worst affected by Ebola.

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Analysts expect the economic damage from the virus, which has led to over 1,500 deaths in recent months, to be largely contained to Africa. Still, they warn that the risk of a pandemic that could have a devastating impact on world growth remains.

"On a regional scale, we have already seen geopolitical implications of the Ebola outbreak with flight cancellations and significantly impaired trade and human mobility," said Vikas Shah, CEO of Swiscot, a global textiles firm and a professor who's been following the Ebola crisis closely.

"Should a novel or other virus emerge with high mortality and ease of transmission, it could lock-up our global economy quite fast," he said, adding that some studies suggest that the cost of a major flu-pandemic could be almost $200 billion in the U.S. alone.

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At its worst, a severe flu pandemic could cost 4.8 percent of global gross domestic product (GDP), or more than $3 trillion, sparking a global recession, Olga Jonas, economic adviser, health, nutrition and population at the World Bank wrote on the organization's website late last year.

"What we can say confidently is that there is a high chance of another pandemic. We travel more often, so viruses can spread more easily," said Dr Jonathan O'Keeffe, medical director at International SOS, a leading medical and travel security risk services company that employs over 10,000 people working in 70 countries. "We don't know which virus it will be and when, but sadly we do know it's coming."

Tracking the impact of the Ebola crisis

Remember SARS?

The spread of severe acute respiratory syndrome (SARS) in 2003, mostly in Asia, showed just how damaging a fast-spreading virus can be to the world economy.

GDP in Hong Kong (one of the worst-hit countries) and Singapore tumbled more than 2 percent in the June quarter of 2003 as a result of the virus, which infected about 8,000 people.

"While the number infected was not that great, SARS had a big negative impact on the countries most affected as people stayed home for fear of catching it," Shane Oliver, head of investment strategy and chief economist at AMP Capital, wrote in a note last month looking at the implications of Ebola.

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Consumers staying at home because they fear catching a virus means fewer retail sales and less travel, hurting an economy in addition to the damage suffered from the absence of sick workers and disrupted supply-chains.

"Not withstanding the terrible human impact of Ebola - the effect caused by an outbreak on regional air traffic can be significant," said James Stamp, head of transport at KPMG, speaking about the impact of the Ebola outbreak on the aviation industry.

"In 2003, the SARS virus caused an 8 percent reduction in traffic (worth $6 billion of revenues) in Asia-Pacific, the affected region. Outside of Asia, U.S. airlines attributed a $1 billion reduction in revenues to SARS," he added.

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The World Health Organisation, which declared the Ebola outbreak an international public health emergency early last month, has not issued a general ban on international travel and trade.

Experts say catching Ebola requires direct contact with someone who has had the disease, so this means the risk of Ebola spreading through air travel is lower than air-born or respiratory diseases.

"Our base case scenario (with a 90 percent probability) is that Ebola remains essentially contained to Africa," said AMP Capital's Oliver. "This suggests that while there might be a bit of short-term volatility around Ebola scares, there is unlikely to be a major impact on share markets."

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No to complacency

Still, the Ebola outbreak, the largest and longest on record, highlights the need not to be complacent about the risks posed by deadly viruses.

"Many of my friends who are in the medical-world are quite startled that there isn't more being done at international borders to check for 'warning flags' of potential illness for flights travelling from high-risk areas," said Swiscot's Shah. "My gut-feel is that there is a disconnect between the serious warnings given by global-health practitioners and a lack of will on governments to act."

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That concern was also reflected by the World Bank's Jonas, who wrote last year that pandemic risk is "under-managed" by governments.

O'Keeffe at International SOS, which has been advising companies on Ebola response planning,said he tries to encourage companies to adopt preventative measures and ensure that they have a "tried and tested" pandemic response plan in place.

"For an organization to recover quickly from a pandemic it has to take swift action," he said. "For instance if there is a pandemic outbreak in South America, has a company put in a place an action plan on how this would impact its plant in China?"

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Experts add that the Ebola crisis shows that early intervention, surveillance and treatment can help contain a deadly virus.

"Ebola is unlikely to have the same impact on the global economy as SARS, but there is still a need to not be complacent," said KPMG's Stamp.