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• With risk appetite already fragile, swine-flu outbreak will strengthen aversion plays
• WHO meeting on 28 April critical in shaping confidence and expectations
• Tourism, retail and stretched budget deficit economies are potentially at risk

 
The situation is changing at a rapid pace and, with widespread media coverage, there are a huge array of forecasts being made.

As the toll within Mexico rises, early indications are that of the 149 recently reported flu-related deaths, 20 have been confirmed as caused by the new swine flu virus. Suspected swine flu cases in Mexico have risen to 1,614.

Early signs suggest a global impact, with confirmed swine flu cases in the US (currently 40), Canada, UK and Spain and suspected cases reported in France, Brazil, Australia and New Zealand.

Public health emergencies have been declared in the US and other countries and the World Health Organisation (WHO) will meet on 28 April in Geneva to discuss the need to raise the pandemic alert level. The WHO currently rates the threat at phase 3 in a 6-point scale (6 being the highest). This will be an important event in the next 24hrs. Unconfirmed reports suggest the WHO will raise the threat to phase 4.

It is not definitively clear how this swine-flu virus is transmitted; the avian flu virus of recent years was almost exclusively transmitted from birds to humans with very rare cases of human-to-human transmission. Clearly, the evidence of human-to-human transmission significantly raises contagion risks from swine flu.

Severity of cases outside of Mexico has been weaker so far and there have been no confirmed cases yet in Southeast Asia. Situation remains very fluid.

Avian Flu and SARS

• Health scares are not uncommon. Sometimes the early warnings can be far worse than the final outcome, although naturally authorities err on the side of caution. In recent years there have been health scares such as SARS and avian flu and it is useful to highlight the distinctions between these and swine flu in order to assess the implications.
• Whilst we await further information from health authorities, it is not clear how swine-flu is transmitted. Avian flu (a H5N1 flu strain, vs. a H1N1 strain for swine-flu) was predominantly transmitted from bird-to-human and not human-to-human (though there are rare cases of the latter). This made the containment of avian flu globally during the periodic outbreaks from 1997-2006 relatively easier and confined to livestock culls to stem wider infection.
• SARS, whilst also causing flu-like symptoms, spread more quickly as it was transmittable human-to-human via contact or proximity to infected patient. Contagion risks were higher and hence the implications and immediate impact of the SARS outbreak was far deeper.
• Critical in assessing the risk of swine-flu is what properties it shares with previous outbreaks. Evidence of human-to-human transmission makes risks far greater than a pathology that more closely resembles avian flu.

Further monitoring needed

It is too early to call the severity of swine-flu and the economic implications. Thee are some comparisons done with previous outbreak in emerging markets, specifically Asia. Such comparisons are by necessity rather than design. The SARS outbreak in 2003 provides a useful and recent guide of the potential parameters relating to a global outbreak. It does not necessitate that Asia will again be as vulnerable as before. Indeed, Asia is probably better prepared for outbreaks of this nature. Not all tourist destinations will be effected in the same way as before and the impact of swine-flu will unlikely be uniform this time around either. Based on the information we have to date, Asia and the Middle East remains the regions best able to weather both health shocks as well as the underlying pressures from the global recession.