Just when the economy was trying to bounce back from recession, swine flu broke out. Now, it's almost taken the form of pandemic with the number of victims rising and more and more countries reporting positive cases everyday. The outbreak of swine flu is likely to take a toll on the ongoing economic crisis thereby slowing the recovery process further. Following are some of the effects of this disease on the economy,

• The economy is likely to experience a further drop in the production rate as many workers may stay at home in the fear of contamination.
• Travel and tourism, one of the worst affected victims of recession, is likely to face yet another slack in business since travelers may avoid visiting the infected countries. Already the industry is losing in terms of canceled trips and hotel bookings. The travel insurance industry would also get its share in terms of losses.

Diseases and their effects on economy

In recent times the economy has suffered largely during the outbreak of SARS (Severe Acute Respiratory Syndrome) and bird flu (avian flu) though the severity of those diseases was much less than that of swine flu in terms of affecting nations. The travel, tourism and services industries in the South-East Asian countries were totally ruptured during the pandemic alarms. The travel industry alone had lost around $30 billion during the SARS outbreak.

A different proposition
Some experts, however, are suggesting that the effects this time won’t be too drastic since the market is already low. Both the production and consumption rates are at their lowest rates in years. However, the fear isn't irrational. Swine flu can still cause damages serious enough to mop-up the signs of economic recovery. Here's what the economy is likely to experience:

• A further drop in the rate of consumption as people would tend to avoid malls and departmental stores in fear of contamination.
• Governments in certain countries have raised serious alarms and have decided to keep the schools and offices closed till further notice.
• Tourists are canceling their vacations to affected countries thereby leaving the aviation and tourism industry to absorb losses in terms of billions of dollars.
• The companies too would suffer losses as their marketing executives won't be able to fly to affected places.
• If the situation worsens the workforce may choose to stay indoor even braving the fear of job loss; mean the unemployment rate would rise.

We mustn't also undermine the aftereffects of the disease. In 1918 about 2.5% of the world population had succumbed to flu epidemic. With today's world population that would mean the death of 150 million (approx) people. This may result in a shortage of workers in the global economy and probably would lead us to yet another economic recession.