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Global Macroeconomic Consequences of Pandemic Influenza

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  • Warwick McKibbin
  • Alexandra Sidorenko

Abstract

This paper explores the implications of a pandemic influenza outbreak on the global economy through a range of scenarios (mild, moderate, severe and ultra) that span the historical experience of influenza pandemics of the twentieth century. An influenza pandemic would be expected to lead to: a fall in the labour force to different degrees in different countries due to a rise in mortality and illness; an increase in the cost of doing business; a shift in consumer preferences away from exposed sectors; and a re-evaluation of country risk as investors observe the responses of governments. The paper finds that even a mild pandemic has significant consequences for global economic output. The mild scenario is estimated to cost the world 1.4 million lives and close to 0.8% of GDP (approximately $U330 billion) in lost economic output. As the scale of the pandemic increases, so do the economic costs. A massive global economic slowdown occurs in the “ultra” scenario with over 142.2 million people killed and a GDP loss of $US4.4 trillion. The composition of the slowdown differs sharply across countries with a major shift of global capital from the affected economies to the less affected safe haven economies of North America and Europe.

Suggested Citation

  • Warwick McKibbin & Alexandra Sidorenko, 2006. "Global Macroeconomic Consequences of Pandemic Influenza," CAMA Working Papers 2006-26, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2006-26
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2017-02/26_mckibbin_sidorenko_2006.pdf
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