While many people around the world are fearing for their health after an outbreak of swine flu, economists are now fearing what the flu could do to the health of the already-ailing global economy.
The New Zealand dollar has dropped after its economists forecast that the Reserve Bank will cut rates, citing concerns that a swine flu outbreak may hurt tourism. Ten students returning from Mexico have been labelled as “highly likely” to be infected with the flu.
But a report from a National Australia Bank economist has said that a swine flu outbreak in the United States could hurt its economy and spread throughout the world.
Mark Rodrigues has told The Age that swine flu “certainly doesn’t help” the condition of the global economy as it attempts to recover from a wide spread recession.
The flu has already killed 20 people in Mexico, and in the US – where Barack Obama has declared a public health emergency – 20 cases have been confirmed.
The spread of swine flu ”could have a negative impact on the global economic scene,” he said.
”If it’s serious enough it can impair the normal functioning of the economic system.’
”If it does become a bigger impact, it impacts not just on regional but global confidence,” he said, and commented that the flu ”can spur another bout of risk aversion…and can have broader implications through a range of asset classes.”
Shares higher
Meanwhile, the Australian sharemarket has opened higher following positive leads from Wall Street late last week.
The benchmark S&P/ASX200 index was up 52.5 points or 1.41% to 3764.8 at 11.55 AEST. The dollar also gained to US72 cents.
Westpac shares gained 1.7% to $20.57 while Commonwealth Bank shares rose 1.3% to $36.41. ANZ rose 0.4% to $16.97, as Woolworths rose 1.6% to $26.77.
Lion Nathan takeover
Lion Nathan shares have gone up over 40% to $11.67 as the group agreed to sell the remaining 54% of its company to Japanese brewery Kirin Holdings.
Lion Nathan, which owns the XXXX, Tooheys, Boag’s, Beck’s and Heineken brands, is already part-owned by Kirin. The two companies have been in talks since midway last week.
“We believe this is a very attractive outcome for Lion Nathan’s non-Kirin shareholders,” Lion Nathan chairman Geoff Ricketts said in a statement. “It is a compelling offer at a significant premium. The company has provided strong shareholder returns over the last few years.”
Overseas, the Chinese Government will spend about $US10.3 billion in the third part of its stimulus package, the Chinese Economic Observer newspaper has reported.
The spending amount is below analyst expectations, and the Government will roll back investment in sectors that have strong prospects. The Government has also said it will invest in areas that private institutions have ignored.
In Japan, the Government has slashed its forecast for the national economy, saying that GDP will contract by 3.3% in the year ending March 2010.
The Government has also altered its estimates for industrial output and exports, which have been the main sector hurting the economy.
“High uncertainties remain over the outlook for the stabilisation of the global financial system as well as the economy,” the Cabinet Office said in a report. “Developments in job conditions need to be carefully watched.”
In the US, Treasury Secretary Timothy Geithner has said that the US Government will do “whatever it takes” to help the economy recover.
“Now that we have achieved unprecedented agreement on the right strategy and the right set of tools, we need to keep the pressure on to execute quickly and achieve a lasting, shared recovery,” Geithner said.
“The United States will sustain action as long as necessary to see growth resume, not just nationally but globally – an objective that is important not just for our shared prosperity but for our national security,” he said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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