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What would a bird flu pandemic cost?

Government officials and financial leaders got together this morning in Washington, D.C. to discuss the economic impact of an avian flu pandemic. The not-so-exciting consensus? Uncertainty. The two most popular words at the conference, held at the Center for Strategic and International Studies, were “it depends”. It seems there are simply too many factors – ...

Government officials and financial leaders got together this morning in Washington, D.C. to discuss the economic impact of an avian flu pandemic. The not-so-exciting consensus? Uncertainty.

The two most popular words at the conference, held at the Center for Strategic and International Studies, were “it depends”. It seems there are simply too many factors – the nature of the virus itself, the flexibility of supply chains, the capacity of critical information networks – to give any kind of accurate portrait of what an epidemic would mean for markets. 

So what is the critical determing factor on which everyone agrees? How people – and governments – respond to a crisis when it emerges.

Do people panic and head for the hills, spreading the illness to uninfected areas? Does the government take quick action? Do people stay home to care for loved ones, leaving factories and offices empty? Or do they continue to go about their business, as it seems most people did during the 1918 flu pandemic? 

“Behavior, behavior, behavior is everything,” said Charles Blitzer, an assistant director at the IMF.

In the middle of the discussion on this most dreary subject in the dismal science, there was a moment of relief. Andrew Burns, lead economist for the World Bank Prospects Group, paused at one point during his presentation, turned away from the podium, and let out a startlingly flu-like sneeze. A nervous moment passed, there was an uncertain chuckle here and there, and then laughter broke out around the room. The Citgroup report and IMF report are both available online.    

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