Swine Flu's Potential Economic Effects: Mexico's Tourism, Retail Sure To Suffer

Wachovia has issued a report that gives a cursory overview of how the swine flu crisis will effect Mexico as well as international economies, based primarily on the 2003 SARS epidemic model. The report notes that Mexico's tourism industry will surely suffer, as the Christian Science Monitor reported Monday in the aftermath of the European Union's travel advisory that trips to Mexico should be canceled or delayed, unless it was absolutely "urgent."

The Wall Street Journal also reports that, though "the potential impact from the influenza on industry is less than clear, retail and tourism businesses are likely to bear the brunt of the losses." In fact, according to the AP, Mexico City alone is losing $57 million per day on event cancellations and closed businesses.

The blow to domestic tourism and retail industries is also compounded with a large drop in the Mexican Peso, which according to Bloomberg dropped by 5.1 percent on Monday, more than any other currency that Bloomberg tracks. The Bloomberg report notes that the currency devaluation and economic swine flu woes will increase the likelihood that Mexico will tap into a new $47 billion International Monetary Fund loan facility.

UPDATE:Swine flu economic fears, compounded with capital concerns continued to metastasize in world markets Tuesday, with European stocks dropping across all 18 Western European markets, Bloomberg reports.