'Little' flu impact on economy

BY DAVID HARGREAVES
Last updated 13:18 14/07/2009

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Swine flu is likely to have little impact on the New Zealand economy, the Reserve Bank says.

The central bank has prepared a paper looking at the potential effects of the current global pandemic.

Based on what it terms the "baseline" assumptions about the likely rates of infection in this country, the RBNZ estimates that economic output may decline by only 0.62 percent this year. The assumptions are based around Ministry of Health estimates of 200 influenza deaths for the entire New Zealand population.

RBNZ assistant governor John McDermott said the anticipated impact is less than that seen in Hong Kong during the outbreak of SARS and more slight than the impact on the US economy during the 1918 global flu pandemic.

"We appreciate there is a real human cost to influenza, as this strain is already unfortunately demonstrating. Given the relatively high rate of contagion of this strain, we considered it appropriate to model the possible impact on the economy from a pandemic," McDermott said.

"The baseline numbers are based on Ministry of Health assumptions. We also modelled other more extreme scenarios which we note are extremely unlikely to occur since they are predicated on much more aggressive strains of influenza," he said.

The paper, written by Martin Fukac and Kirdan Lees in the RBNZ's economics department, assumes that over the course of a year about 897,600 working weeks might be lost because of the swine flu.

This is based around an assumption of those catching it being ill for a period of four to six days. This would represent a 2.3 percent decline in the working labour force during the year.

 

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