By Emily Kaiser and Lesley Wroughton
WASHINGTON, April 26 (Reuters) - The swine flu outbreak is not yet severe enough to shake global markets, but finance leaders and investors said on Sunday they were keeping a watchful eye, mindful a pandemic in the midst of a recession could be catastrophic.
The World Bank agreed to $205 million in loans for Mexico, where the flu has killed as many as 81 people. Mexican Finance Minister Agustin Carstens said the flu could have an "important impact" on his country’s economy, although it was too soon to say how it would play out. [ID:nN26482522]
"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," he said at a news conference at the conclusion of a World Bank meeting in Washington that was unrelated to the flu outbreak.
"At this stage, without ignoring that this is a very serious matter and it has a high potential for disruption, I would say that it’s early to give a more concrete opinion," Carstens added.
In the neighboring United States, where 20 cases of swine flu had been diagnosed, White House spokesman Robert Gibbs said it was "probably far too early to determine" whether the outbreak would set back an economic recovery.
European Central Bank Governing Council member Ewald Nowotny, asked by Reuters whether the outbreak would impact the global economy, said: "I don’t think so but I don’t have enough factual information to give a qualified answer to that."
The obvious initial financial impacts would be felt on travel and tourism companies, health care stocks, and pork producers, even though there is no evidence that any of the flu cases stemmed from contact with pigs. [ID:nN26403255]
"This comes at a bad time for the global economy -- it’s exactly what we don’t need," said Justin Urquhart Stewart, director of Seven Investment Management in London. "It’s rubbing salt into an already unpleasant wound."
Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey, said there was still too little information about the flu outbreak for markets to react.
"We don’t know enough yet about how many people are affected, geographical information or whether it’s central to one location -- the broader implications," he said. "There is not enough critical mass for markets to react to it."
$3 TRILLION HIT
If the outbreak becomes severe, triggering a clamp-down on trade, the cost to the global economy could climb into the trillions of dollars. The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and result in a nearly 5 percent drop in world gross domestic product.
Trade was already under pressure after the financial crisis intensified in September, with steep year-over-year declines in exports recorded in countries including Japan, China and the United States.
World Bank and International Monetary Fund studies documenting the impact of such health crises show that the severity of a pandemic depends on infection and fatality rates, duration, and how prepared families and businesses are.
A pandemic similar to the 1918 Spanish flu could result in high levels of illness and death, and a sharp but only temporary decline in global economic activity.
Economic disruptions could come from high absenteeism, as people may be asked to stay at home, or may choose to do so to care for sick relatives or because of fear of being exposed.
Mark Waggoner, president of Excel Futures Inc in Huntington Beach, California, said if the flu spreads and becomes a bigger story in the international media, it could become a bigger financial market and economic factor.
But right now, "people are too worried now about the economy to be worried about being sick," he said. (Reporting by Lesley Wroughton and Anna Willard in Washington, Chris Sanders in New York, and Andrew Torchia in London; Writing by Emily Kaiser)