Swine-onomics steps in (Este es mi artículo de The News, Hoy)

What might the economic consequences of the swine flu epidemic be?

We basically have two choices: Either we take aggressive action to stop the spread of infections in the next few days, even at high economic cost; or we err on the cheap side and, for fear of a drastic economic downturn, we fail to impose the measures necessary to eliminate the conditions that likely enable the epidemic to enter into an exponential spiral.

As in many things in life, there is a clear economic problem underlying the influenza outbreak in Mexico, especially in greater Mexico City.

If the outbreak had been in another distant area of Mexico, the choice would have been easier: just shut down all economic activity.

But shutting down the Mexico City metropolitan area - even for only a few days - would mean a tremendous blow to an economy already in a most fragile position.

Roughly speaking, Mexico City and the State of Mexico, the two most affected areas by the influenza epidemic, account for 30 percent of Mexico's total annual GDP.

On average, this means the region contributes about half a billion dollars per day to the national economy.

So shutting down Mexico City and its metropolitan area for a week may mean as much as $3.5 billion in losses to the economy, which is already in a deep recession.

Just think of what the April economic data will look like. It will likely be a bloodbath.

Let's recall that we already have the Easter effect working against us: April 2009, which included Easter, will be compared against April 2008, which was a full month (in 2008, Easter fell in March), and that will make the data look awful.

Factor in the effect of the ongoing health alarm, which may have already cost us an estimated 0.3 percentage points of GDP, according to my own hasty calculations.

In other words, the stronger the measures to contain the virus from spreading, the better results we will get from the public health point of view, but the higher the economic cost.

It is apparent to me that the government is seeking the hard-to-find middle road between the maximum economic cost acceptable in the short run, and the minimum measures necessary to halt the spread of the epidemic.

I wish them the best of luck, honestly. I really hope with all my heart that the authorities succeed in keeping influenza cases under the critical line that denotes exponential spiraling while finding the lowest possible economic cost. I really hope it works. If it doesn't and if influenza cases fail to recede soon, or worse, if after a brief period of success cases spike again, then tackling the epidemic will be more difficult and the cost to public health will be even greater.

Regardless of the success we may have in coping with this problem in the next few days, or hours, there will be long-term effects requiring specific strategies to correct.

The most evident of these will be tourism. Luckily, dinosaurs are not a client market these days, because they will never forget that it was here that their extinction began.

Still we will need an intelligent and comprehensive campaign in the future to break the stigma linking swine flu epidemic and Mexico in order to regain our competitive edge in tourism.

We are walking a razor's edge here, and the latest data seems supportive of a scenario of a relatively controlled outbreak that should be reduced in coming weeks. There is nothing that I wish more than that the government gets it right this time around. Amen.