Pandemic would cripple NZ: study

CANBERRA - New Zealand could lose 500 people and see its economy contract by about 1.4 per cent in a "mild" pandemic of the scale of the 1968-69 Hong Kong flu, a study on the global economic consequences of a major outbreak has estimated.

This could soar to 51,500 deaths and an 18 per cent hit to the economy in a worst-case scenario, the Australian Lowy Institute paper said.

Across the Tasman, Australia's economic blow would be less severe, but the death toll far higher - 2100 in a mild pandemic, 214,200 at worst.

The estimates add to other studies that show swine fever is looming as a potential hammer blow for a world already flattened by the worst downturn since the Great Depression.

These predict the outbreak could wipe hundreds of billions of dollars from economic growth, hitting employment, industry, trade and financial and share markets.

Transport and tourism are already bracing for even worse times ahead as swine fever continues to spread from Mexico to North America, Europe, New Zealand and Australia.

The Lowy Institute study found that even a mild pandemic would have significant consequences, killing 1.4 million people worldwide and hewing US$330 billion ($593.5 billion) from the global economy.

At worst, a pandemic similar in scale to the worldwide 1918-19 Spanish flu outbreak could kill more than 142 million, slice vulnerable developing economies by more than 50 per cent, and reduce global economic output by US$4.4 trillion.

In Australia, where yesterday more than 20 people were being tested for swine fever, the federal Cabinet was briefed on the threat and possible responses by Commonwealth Chief Medical Officer Jim Bishop.

"This is a serious matter," Prime Minister Kevin Rudd said.

"All necessary resources will be deployed to meet the threat, calibrated to how it unfolds," he said.

Four people were tested and cleared in Brisbane and the Gold Coast, with a further 12 in Queensland awaiting results yesterday. Ten were being tested in New South Wales, and two in Tasmania.

The potential new economic blow comes as Treasurer Wayne Swan prepares to bring down a harsh Budget in two weeks, amid reports that almost 30,000 people have already lost their jobs in the tourism industry, and forecasts that unemployment will reach one million.

The Lowy Institute study, also used by the World Health Organisation, warns that much worse will be in store if swine fever becomes a pandemic.

Written by Professor Warwick McKibbon of the Australian National University, the Washington-based Brookings Institute, and ANU colleague Alexandra Sidorenko, the study was originally published in 2006.

But McKibbon said yesterday that even with the global economic crisis, its conclusions still held.

The key factors included the way in which panicking people changed their spending, the numbers of people lost to the workforce by illness or death, and the impact on confidence in financial markets.

"I think those characteristics probably aren't affected very much by the starting point," McKibbon said.

McKibbon said that the Lowy paper had urged governments to prepare for a pandemic that experts said was long overdue, spending money ahead of time to lower the costs when disease struck. "It's too late for that argument now," he said.

"The H1N1 virus [of swine fever] is basically the source of the Spanish flu and is travelling remarkably quickly between humans.

"The good news is that the avian flu did actively push a lot of countries into putting into place response mechanisms and strategies, and you're seeing that in action immediately.

"And the World Health Organisation is listened to now, whereas with the Sars [virus] they were ignored by some countries - to their detriment.

"So in that sense we were lucky we were given a heads-up."