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For all the misery the H1N1 pandemic is causing people felled by the flu bug, the outbreak is unlikely to reach the point where it depresses overall economic activity in Canada, the Toronto-Dominion Bank said Thursday.

"In the unlikely case of a more severe outbreak, increased employee absenteeism due to illness could have a negative - albeit temporary - impact on hours worked and, therefore, economic activity," TD economist James Marple said in a report on the possible economic impact of H1N1.

At this point, however, the economic prognosis is not that dire, Mr. Marple said.

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"Fears about H1N1 have heightened concern over the state of North American economies. While the impact on human lives should not be understated, at the current stage we do not believe the disease will reach a large enough scale to have a noticeable effect on aggregate economic activity," he said.

In the past 100 years, prior to the current H1N1 outbreak, there have been three major flu influenza pandemics - the most serious in 1918, when the so-called Spanish flu infected close to 30 per cent of the world's population and killed an estimated 50 million people, or 3 per cent of the population, Mr. Marple said in looking at the best-case/worst-case scenarios.





Worst-case scenario

In the worst-case scenario - if the current H1N1 outbreak proves as severe as the flu of 1918 - Canada's gross domestic product could be negatively affected, somewhere in the range of 1.3 per cent to 2.8 per cent, Mr. Marple said, adding the prospect of such a severe outbreak is "highly improbable."

And even in the event of a Spanish-flu type outbreak, the effects would be "relatively short-lived," he said.





Less severe, and 'unlikely'

In 1957 and again in 1968, influenza pandemics affected 30 per cent of the global population, but the death rate was much lower than in 1918.

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"Should the spread of the disease prove worse than expected, an influenza pandemic similar to those of 1957 and 1968 would also likely prove to have a relatively mild effect on overall economic activity," Mr. Marple said.

"The total economic impact of this type of pandemic could be a negative shock to real GDP growth of between 0.4 per and 0.8 percentage points."





Most likely scenario: a mild case

The Canadian economy appears poised to withstand the current H1N1 pandemic, even taking flu-related absences into account, Mr. Marple said.

"Many businesses will have contingency plans to avoid the disruption in activity … In all likelihood, at least a portion of the work will be made up by employees who remain on the job. And, given the advances in technology since the outbreaks in 1957 and 1968 allowing employees to readily work from home, it is reasonable to expect an even a smaller disruption in economic activity today."





The SARS experience

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Overall, real GDP declined in Canada by 0.5 per cent, annualized, in the second quarter of 2003, a decline that was attributable, in part, to the impact of the SARS outbreak.

"Nonetheless, this downturn in the Canadian economy can not be entirely laid at the feet of SARS … At least a portion of the decline was due to non-SARS-related factors such as the appreciation of the Canadian dollar and travel fears in the U.S. as a result of the outbreak of the Iraq war."



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