What would happen to the economy if a pandemic hits, and why?

Estimates for global economic losses run as high as $4.4 trillion, CNN reports . Even a mild pandemic could cost the US $330 billion, according to an economic analysis released in February 2006. "It's not that avian flu will wipe out the world's population. In fact, some say only 5% of those infected would die. It's just that it would do an enormous amount of economic damage. It could spin into a spectacular downtrend," Sherry Cooper, a global economic strategist told BusinessWeek. For more information, see the full report on the potential global economic impacts of an avian flu pandemic.

"Interestingly, the most immediate economic impacts of a pandemic might arise not from actual death or sickness but from the uncoordinated efforts of private individuals to avoid becoming infected," according to Milan Brahmbhatt, an economist for the World Bank. With SARS, people tried to avoid face-to-face contact, which led to a dramatic drop in the service industries--like tourism, mass transit and retail. These are known as disruption costs. Potential world output would also probably fall during a pandemic because of decreases in productivity due to death or illness, Brahmbhatt says.

On the other hand, the threat of this pandemic is turning into a boon for companies specializing in hygiene protection kits and for drug companies creating a vaccine.

The US Government provides businesses with a Business Pandemic Influenza Planning Checklist. Suggested preparations include, "Establish policies for flexible worksite (e.g. telecommuting) and flexible work hours (e.g. staggered shifts)" and "Train and prepare ancillary workforce (e.g. contractors, employees in other job titles/descriptions, retirees)."