The macroeconomic costs of a global influenza pandemic

There is growing support for the theory that at some point in the near future there will be an outbreak of an infectious disease that will be of global concern. SARS could be considered an early warning of the potential impact of infectious disease on the modern globalised economy and with the possibility of human to human transmission of bird flu or other strains of influenza on the horizon the potential impact of more serious infectious disease outbreaks is unknown. Pandemic influenza carries with it the possibility of widespread mortality and morbidity. Traditional health economic methods focus on the specific health sector impacts whilst the larger macroeconomic picture goes unnoticed. The fall in labour supply, avoidance of public places and events, potential closure of schools is bound to impact the global economy and therefore traditional methods of health cost estimation must yield to macroeconomic modelling in order to capture the true potential impact. This paper unites disease parameters, pandemic planning policies and CGE modelling in an attempt to capture the potential cost to the global economy of a future influenza outbreak. The estimation uses a 16 region, 20 sector global equilibrium model in GAMS and is calibrated using GTAP data. The policies modelled include reduced labour supply due to morbidity, mortality and school closure. Attempts to combat an influenza pandemic may involve the use of antivirals and vaccinations. The model reveals that although the impacts of a base disease scenario is quite small (GDP loss of approximately 0.5%), the policies introduced to mitigate disease spread, such as school closure, yield unprecedented losses to the economy of up to 8% of GDP. Our results also suggest that, although the effectiveness of antivirals and vaccines is unknown, such interventions may prove to be extremely important in mitigating the high economic cost of school closures.