The cost of swine flu

Swine flu hits public health and the economy in South America

After North America, where the influenza A H1N1 outbreak began, South America is the region worldwide most affected by the virus. This illness—commonly referred to as the swine flu—is taking a particularly high toll in Southern Cone countries (Argentina, Chile, Paraguay and Uruguay), now in their winter season, both in terms of public health and the economy. The magnitude of the impact on growth rates is difficult to discern as the pandemic is still gathering steam. However, estimates of economic losses range from 0.5% to 1.5% of GDP in affected countries.

According to the World Health Organization (WHO), the swine flu propagation rate is “without precedents.” It took the A H1N1 virus less than six weeks to spread widely, while previous flu pandemics in 1918, 1957 and 1968 needed more than six months to spread to the same extent. The same organisation admits that “the virus cannot be stopped” and can potentially affect all the planet’s 6.8bn inhabitants. As of late July, approximately 94,500 people have been infected with the virus around the world, and around 500 people have died because of it.

Within South America, Southern Cone countries are experiencing an unusually cold winter, with record low temperatures spurring common winter respiratory problems as well as infections with the influenza A H1N1 virus. This situation is causing alarm among the population and overloading healthcare systems.

Indeed, health officials from Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay gathered in Buenos Aires on July 15th to discuss and propose common measures to contain the current pandemic.

The combination of a global influenza pandemic and a global economic crisis, both on unprecedented scales, is battering the region hard. The swine flu will exacerbate economic damage already inflicted by the global recession. According to the World Bank, “the costs associated with mortality, illness and absenteeism, and efforts to avoid infection, could shave off more than one percentage point of GDP in countries affected.” The same source adds that in the event of a pandemic—as the outbreak has since been declared—economies that rely heavily on tourism would be particularly severely affected. Several of the Southern Cone countries have important tourism industries.

Death toll highest in Argentina
The most affected country in the Southern Cone is Argentina, with the second-highest number of swine-flu-related deaths in the world (after the US) and 70% of the deaths in the Southern Cone. There have been 137 deaths so far, according to an estimate provided by the WHO regional branch, the Pan-American Health Organization (PAHO), on July 22nd.

The public relations impact of these numbers on the Argentinian government’s popularity—the government was accused of sweeping the numbers under the carpet before the mid-term congressional elections of June 28th—recently prompted a vigorous statement by President Cristina Fernández: “Argentina is ranked higher because it is the country that really counts all the figures.”

The outbreak first hit hard in June, particularly in the metropolitan area of Buenos Aires. However, despite the suggestion of most infection specialists and even that of the then-Health Minister Graciela Ocaña that the government should declare a national health emergency and suspend the June election (which would have helped stem the spread of the disease), the government prioritised the electoral agenda and delayed measures to combat the epidemic. Soon after the voting was over, Ms Ocaña resigned, underscoring in the eyes of many the government’s mismanaged response to the epidemic.

The new health minister, Juan Manzur, also rejected the option of declaring a national emergency, instead leaving each local government to develop a response on its own. The only measure taken at the national level was obligatory holidays for high-risk groups, while all provinces decided to suspend school classes for a month. Contrasting with the Fernández government’s widespread intervention in the economy, this time national authorities stated that they preferred to respect individual freedom, and did not implement more drastic measures such as the closure of venues where people commonly concentrate, such as shopping malls, theatres, cinemas, pubs and clubs.

Some local governments decided to close these venues temporarily, although such measures require wider co-ordination to be effective. The most important step taken by the health minister was a change in the medical protocol on June 29th: All flu cases thereafter would be treated as A flu, so ill people would receive the proper medicine. Before that, medicines were restricted to the most severe cases and to high-risk groups, probably due to insufficient stock of oseltamivir, the antiviral drug used in the treatment and prevention of influenza A. This change has surely helped to contain the epidemic.

In early July the rapid spread of the illness generated panic and led many people to start staying at home to prevent contagion. Although there are no official estimates yet, economic activity is suffering as a result. The most affected sectors are hotels and restaurants, transport, tourism, education and public administration. Private sources estimate the impact could amount to between 0.5% and 1.5% of GDP for 2009. However, the actual figure will ultimately depend on the range of policy responses by government, both at the federal and local levels, which so far have been belated and disorganised.

Limited economic cost in Chile
Chile was hit by the virus at the onset of the Southern winter, although its government had begun to take preventive measures back in April. By July 22nd there were 11,293 confirmed cases and 68 deaths, according to the PAHO. Nevertheless, the epidemic is proving less contagious and lethal than other seasonal influenza epidemics in recent years, and does not appear likely to have a significant economic cost.

Altura Management, a private healthcare consulting firm, has projected a worst-case scenario of 100,000 infections in 2009 in Chile. Of this number of patients, 97.7% are expected to suffer only light symptoms that can be treated at home on the basis of rest and antiviral drugs at an average cost of Ps22,187 (around US$39) per person. Two percent would be severe cases requiring hospitalisation at an average cost of US$1,770 each; and 0.3% would be extremely severe cases requiring stays in intensive care units at an average cost of US$21,240. Under such a scenario, the overall cost would reach Ps7.8bn (US$13.7m).

Worse still to come in Brazil
In other Southern Cone countries the magnitude of the outbreak has been less dramatic, at least thus far. In Brazil, authorities say the number of deaths has totalled just 20 to date (up from the 11 recorded in the PAHO’s latest weekly report, see table). The Rio de Janeiro municipality has voiced concern that because of a lack of personnel and resources to combat the spread of the virus the figure will certainly rise. Most cases in Brazil are concentrated in Rio Grande do Sul, the state that borders both Uruguay and Argentina, and in São Paulo.

In Paraguay, there were 175 confirmed cases and 10 deaths as of July 22nd, according to the PAHO. Uruguay is a striking case: despite being the smallest country of the Southern Cone, both in terms of geographical extension and population, it has reported 550 cases and 20 deaths associated to influenza A H1N1.