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Commentary: Inoculating your portfolio

May 1, 2009
by Elvis Picardo
Reuters

The World Bank estimated last year that a severe flu pandemic as virulent as the 1918 one could cause 71 million deaths worldwide and slash global gross domestic product (GDP) by 4.8 percent or $3.1 trillion. By way of comparison, the recent credit crisis is expected to cause a 1.7 contraction in global GDP this year, the first decline in world output on record, according to an updated forecast from the World Bank in March.

The estimated economic impact of a severe pandemic in the U.S. ranges from a GDP drop of 4.25 percent - according to a 2006 study by the Congressional Budget Office - to a decline of 5.5 percent or $700 billion, based on a 2007 study by the advocacy group Trust for America's Health. That would be about twice the damage inflicted by the credit crisis, which is expected to result in a 2.4 percent decline in U.S. economic output in 2009.

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