Many nations are not taking the threat of bird flu seriously enough and are lagging behind in their preparations for a pandemic, the IMF has warned.
The timing and strength of a pandemic is impossible to predict
The International Monetary Fund said that steps needed to be taken to limit the economic and human impact of an outbreak of the H5N1 bird flu strain.
It called for greater cooperation so nations that have had problems such as the Sars virus can pass on lessons.
Bird flu has killed at least 97 people as it has spread from Asia.
The disease recently moved into Europe and Africa, and has forced the slaughter of more than 140 million chickens and ducks across Asia since 2003.
At present, a pandemic has been contained because the virus cannot survive when airborne and is not transmitted easily between birds and humans.
Unfortunately, the IMF said, this may have created a false sense of well-being.
"Perhaps because an avian flu pandemic may appear to be a low-probability event, albeit one with potential high costs, many countries are only starting to develop a comprehensive approach to this threat," the IMF said.
"While enhancing preparedness will entail upfront cost, the benefits of mitigating the risks associated with a pandemic appear to outweigh these costs," it explained.
Bird flu has been spreading slowly, but surely, from Asia
Should there be a flu pandemic, then one of the main economic pressures probably will be due to absenteeism as people either fall sick or stay away from work.
At the same time, there could be a decline in consumer spending, trade, tourism and general economic activity, the IMF said.
Government budgets are likely to come under pressure as spending increases on healthcare, and the current account deficit may also widen in nations that have to import medicines as their export sales drop.
As a result, central banks must ensure that there is adequate liquidity in the cash and banking markets, and financial watchdogs need to act in a prudent manner, easing regulations where and when needed.
The IMF said that while a rapid recovery is expected to follow any pandemic, central banks and governments should be prepared to intervene for a long time after any crisis in order to ensure a steady and lasting recovery.
"An avian flu pandemic will affect the whole economy," the IMF warned.
"It may also result in major disruptions to transportation, electricity production, telecoms, and may severely stretch even basic services including police, fire and emergency medical care.
"A pandemic will present unique challenges and require targeted responses by management of financial institutions."
While the risks are great, the IMF said that it also was very difficult to predict the exact impact of a pandemic.
"Evolutions in influenza viruses cannot be predicted," it explained, adding that "all estimates of the number of deaths are purely speculative".
However, "there is growing concern about the possibility of an avian flu pandemic and its implications for humans and the global economic and financial system," the IMF said.
"The need to help prepare for a pandemic is becoming an important focus for many governments and international organizations".
Among the things businesses can do to get ready are:
- Establish a senior crisis management team with deputies
- Prepare for a temporary or permanent transfer of authority
- Set up a remote location from which the business can be run
- Work through possible problems and solutions
- Assess the impact on key markets and operations
- Work out an emergency budget and ensure it is well funded
- Undertake regular tests of equipment and procedures
- Ensure key staff have access to vital information and data
- Prepare for people to work from home or off-site
- Work out how to replace suppliers should they be forced to shut