Markets face 20pc fall if swine flu spreads

Markets face 20pc fall if swine flu spreads

World stock markets could fall by 15pc-20pc if the World Health Organisation (WHO) upgrades the swine flu outbreak to a "phase 5" crisis, a leading fund manager has warned.

By Alistair Osborne
Last Updated: 9:14PM BST 29 Apr 2009

Mark Bon, at Canada Life, based his calculation on the market reaction in Asia to 2003's SARS outbreak, which killed 813 people.

The WHO yesterday said it was "moving closer" to raising its six-level pandemic alert to "phase 5", which is characterised by human-to-human spread of the virus into at least two countries in one WHO region.

Mr Bon said that, as the crisis moves closer to a pandemic, "it alters the economic environment and people behave differently. They stop shopping in crowded areas and they travel less."

So far the markets have shrugged off the swine flu threat, with the FTSE-100 last night closing up 93.19, or 2.27pc, at 4189.59. However, Mr Bon said: "If the market is wrong-footed, the reaction could be quite severe."

Narim Behravesh, chief economist at IHS Global Insight, warned that a pandemic could cut GDP in developed economies by 2pc-3pc, exacerbating the world downturn. "For poorer countries, the impact would be devastating," he said.


http://www.telegraph.co.uk/finance/economics/5246131/Markets-face-20pc-fall-if-swine-flu-spreads.html

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