Swine Flu Outbreak Could Deepen Mexico's Recession

By Anthony Faiola
Washington Post Staff Writer
Monday, April 27, 2009

Amid serious concerns that the swine flu outbreak could worsen an already-deep recession in Mexico, the World Bank yesterday moved to provide that nation with millions in emergency aid and set up a special fund for longer-term assistance.

Stung by the credit crunch and weaker demand for its products in the United States and beyond, Mexico is set to suffer a worse downturn than the one in the United States this year, with the International Monetary Fund predicting this week that its economy would contract by 3.7 percent.

Adding to those troubles, Russia, the world's second-largest pork importer, yesterday suspended all pork shipments from Mexico, as well as from three U.S. states, despite assurances from international health officials that the flu could not be transmitted through exposure to pork. Other countries have intensified screening of pork imports. And several nations have issued travel advisories to Mexico just as resorts there are gearing up for summer bookings.

Speaking at the close of the World Bank and International Monetary Fund biannual meetings in Washington yesterday, Mexican Finance Minister Agustin Carstens warned that the outbreak could have an "important" economic impact.

"This issue can have an important impact on the economy, although the most important impact is the one on human life and human well-being," Carstens told reporters. He added that the outbreak was a "very serious matter" with "a high potential for [economic] disruption."

Earlier this decade, the outbreak of severe acute respiratory syndrome (SARS) and bird flu strains in Asia dealt economic blows to more than a dozen nations, forcing airlines to cancel flights, hotels to slash rates and depressing consumer demand. In the case of bird flu, Asian farmers additionally had to cull tens of millions of poultry from their flocks.

Mexico -- and perhaps even the United States if a full-blown outbreak were to spread north of the border -- could face similar problems just as it is struggling with the global financial crisis. Earlier this month, Mexico established a new $47 billion credit line with the IMF, funds that may provide an important cushion if its financial situation sharply deteriorates.

The World Bank yesterday said it would roll out $25 million to Mexico in emergency funds for medicine and equipment, including for devices to detect the new strain of swine flu that has killed up to 86 people there. In addition, it said it was prepared to draw on an additional $180 million to help finance other needs related to the outbreak.

The Mexican assistance came just as the World Bank warned yesterday that health programs in poor and middle-income nations were being severely hit by the financial crisis that started in the United States. A new report from the bank, for instance, indicated that in March eight countries were reporting shortages of HIV- and AIDS-related drugs and treatments, and an additional 14 said they expected to see disruptions in the coming weeks and months.

Robert B. Zoellick, the World Bank's president, yesterday said the institution was offering Mexico advice about how other nations have dealt with similar health crises. He noted that there would be a time to account for the economic toll, "but for now, the focus is on people's lives."

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