The Potential Economic Impact of the Zika Virus

By Dagna Constenla, Gatien de Broucker and Jorge Martin del Campo

This article was originally published in the Dengue Vaccine Initiative newsletter on March 7, 2016, available publicly here.  It is cross-posted here with permission. IVAC is a member of the Dengue Vaccine Initiative (DVI).

A public health emergency of international concern

It’s summer in Brazil now and the sweltering heat of the Northeast Atlantic coast of the country drives many people outdoors where they come into contact with the Zika virus. In Recife, the capital of the state of Pernambuco where a third of the 4,000 reported cases of microcephaly in Brazil have been reported since early 2015, many people cannot afford to buy insect repellent in their local pharmacies. Most families in this part of the country live in impoverished areas with no running water and near open drums that serve as breeding grounds for the mosquito vector. Air conditioning and window screens that could help keep the mosquitoes out are prohibitively expensive.

Today, 24 of 26 states in Brazil are grappling with the rapid spread of the virus. This outbreak, driven by the global trends of population growth, urbanization, globalization expansion of mosquito vectors and the effects of El Niño, shows no signs of abating this year. Every day up to five new microcephaly cases are diagnosed, creating chaos and a break down in primary health care as hospitals and clinics become overburdened with mothers whose babies are waiting to be seen by pediatric neurologists and other specialists.

While the link between Zika virus infection and microcephaly in babies is still under investigation, the sudden exponential rise of cases, following closely the rise of Zika cases is unnerving. This situation has forced the World Health Organization to declare the epidemic of microcephaly cases in regions affected by Zika virus a matter of public health emergency of international concern. If the link between Zika and microcephaly is proven biologically, and evidence are cumulating in support of this relationship, the impact of the mounting epidemic will be far-reaching for Brazil and countries and territories with active Zika virus transmission.

People in Brazil are concerned about the uncertainty and risk of this outbreak and the lack of information regarding the virus. The concern is even greater among pregnant women who don’t understand the long-term implications of the Zika virus on their baby’s life: will their baby’s head fully grow? Will their baby be able to talk and walk? Will they be able to hear? Will they be able to attend school?

The prognosis for children born with microcephaly varies, according to the National Institute of Neurological Disorders, depending on the severity of the symptoms, ranging from impaired cognitive development to delayed motor functions and speech. Brazil’s Health Minister and health care officials in Colombia, El Salvador and the remaining 21 countries and territories of the Americas with Zika outbreaks have advised women of reproductive age to delay pregnancy.

While the Zika virus is new to Brazil and other countries of the region, Aedes Aegypti, the mosquito that spreads the disease, is well known for causing other emerging infectious diseases like dengueChikungunya and yellow fever.

Macroeconomic impact of the Zika virus

Beyond the silent suffering among those directly affected by the Zika virus, state officials have raised concerns about the negative impact that the Zika outbreak will have on the economy of Brazil and beyond. One concern is the potential negative impact of the Zika virus on the tourism industry last month (February), just when the Carnival season begins, and during the Olympic Games scheduled for August 2016 in Rio de Janeiro. Though currently there are no travel restrictions imposed by the World Health Organization (WHO), there have been anecdotal reports about international airlines already cancelling or rescheduling flights for passengers that are traveling to the region that are pregnant or may become pregnant. Moreover, evidence is emerging on the impact that Aedes Aegypti diseases have on tourism revenues. In their 2009 report, Mavalankar and colleagues quantified the impact of Chikungunya and dengue on tourism revenues of three Asian economies: the state of Gujarat in India, Malaysia and Thailand. They reported a substantial loss of tourism revenues: an estimated 4% decline, which represents at least US$ 8 million for Gujarat, US$ 65 million for Malaysia and US$ 363 million for Thailand.

Added to the potential significant losses associated with tourism, the possible decline on foreign direct investmentdue to the Zika outbreak is a major concern. During the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak, mainland China reported a decline of US$ 2.7 billion and Hong Kong foreign direct investment inflows fell 62% in one quarter. When the outbreak ended, this decline in foreign direct investment inflows was reversed.

Investments in outbreak control and surveillance infrastructure may also be impacted by the recent Zika outbreak. Recently, Brazilian authorities invested considerable resources to prevent the growth and spread of dengue. Funding for dengue outbreak prevention registered an increase of 32% over the last four years, from BRL $ 947.7 million in 2012 to $ 1.25 billion, in 2015. This funding was invested in supporting surveillance and preventive measures as well as in studying dengue. These investments are expected to increase with the rapid spread of the Zika virus. As the government of Brazil continues to make investments on preventive and control measures of Aedes Aegypti diseases, the government will continue to make debt repayments in the absence of significant financial inflows to finance outbreak control and surveillance infrastructure.

The loss of productivity due to the Zika outbreak is an even greater concern. Children with microcephaly may not have the ability to achieve their full cognitive potential because they are generally born with impaired cognitive and physical development. Moreover, children who are physically and cognitively disadvantaged are less likely to attend school, resulting in lower educational achievement.

At a macro level, the Zika outbreak could have other long-term repercussions. The government in Brazil and other countries in the region are already advising women of reproductive age to postpone pregnancies anywhere from six months to two years. If women in the region observe these warnings for a significant period of time, there may be a decrease in pregnancies that will ultimately result in a decrease in population growth. This could negatively impact the continued productivity associated with the sizable workforce in Brazil and the region as a whole.

What can we expect?

In terms of opportunities in containing the spread of the virus, recent advances in dengue research have resulted in development of new tools that show promise for use in prevention and control of other Aedes Aegypti diseases. These include vaccines*, antiviral drugstherapeutic antibodiesbiomarkers for severe disease, and mosquito-control methods that are biological, genetic and insecticidal in nature. Many of these new tools will not become available for use for another three to five years. The full potential of these tools, in terms of decreased transmission and prevention of major epidemics of dengue and other Aedes transmitted viruses, will be realized if used together instead of independently.

There are several challenges that Brazil and other Zika-affected countries in the Americas face to contain the spread of the virus. Currently, an overall strategy is lacking to effectively use these new tools and to educate the affected communities. Funding for research in this area and operational program implementation are fragmented and often uncoordinated. However, Brazil’s institutional capacity to manage outbreaks shows promise. The Oswaldo Cruz Foundation is one of many credible, government-funded institutions working to characterize Aedes transmitted viruses, like Zika, and its epidemiology. Moreover, a strong community of health networks across all states in Brazil is helping to promote positive behavioral changes that can temper the spread of Zika at the community and household levels so, next year, when those sweltering in the heat of the Northeastern Atlantic coast of Recife come into contact with Zika, they may be at a lower risk of contracting the virus.

Denvaxia® has recently become available for the prevention of dengue. There are many other dengue vaccine candidates in the pipeline. No vaccines are currently available to target the Zika virus.