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Since 1st March, 1999
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AIDS bomb ticks on India

Singapore, Nov. 29 (Reuters): Imagine an AIDS epidemic that would cut China’s and India’s projected output growth by a third.

Well, that’s the optimistic scenario, according to leading US demographer Nicholas Eberstadt; under more pessimistic assumptions, the economic repercussions would be truly dramatic.

HIV, the infection that leads to AIDS, is on the brink of exploding in the world’s two most populous countries, presaging a human tragedy and an economic toll that governments have been slow to wake up to, experts say.

“It’s extremely clear that HIV/AIDS is not a distant problem for Asia,” said Indu Bhushan, a senior economist in the Mekong Department of the Asian Development Bank in Manila.

He said governments should be under no illusion about the economic damage AIDS will inflict across Asia unless they follow the lead of Thailand and Cambodia and act promptly to curb the spread of the disease.

“Asia has the gift of time because we haven’t experienced catastrophe on the scale that sub-Saharan Africa has, but we mustn’t waste this time,” Bhushan said.

As of late 2001, roughly 28 million of the world’s 40 million HIV carriers lived in sub-Saharan Africa, where perhaps 20 million people have already died and about 9 per cent of the 15-49 age group is infected.

But Eberstadt said it was quite possible that in terms of absolute numbers, the centre of the global HIV/AIDS crisis will shift in the coming generation to Eurasia — Asia plus Russia.

Even without approaching the infection rate of sub-Saharan Africa, the economic toll in the region’s three pivotal countries — Russia, India and China — will be vastly larger, he wrote in the latest edition of Foreign Affairs. “The pandemic there stands to affect, and alter, the economic potential — and by extension, the military power — of the region’s major states,” Eberstadt, a scholar at the American Enterprise Institute, Washington, wrote.

Projecting HIV infection rates is educated guesswork, but the United Nations is alarmed at the starting point.

In a report to mark World AIDS Day on Sunday, the UN estimated that 7.2 million people in Asia-Pacific are carrying HIV, an increase of 10 per cent from last year, with infection rates in parts of India and China reaching 10-20 per cent.

The US Central Intelligence Agency predicts that India will have 20-25 million HIV sufferers by 2010, the most in the world, with China counting 10-20 million.

For his part, Eberstadt has drawn up three scenarios for the spread of HIV/AIDS. In the case of a mild epidemic, with adult prevalence rates reaching 1.5 per cent, 21 million people could die in India and 19 million in China from 2000-2025.

Nearly four million Indians already have AIDS, second only to South Africa; the UN puts its prevalence rate at 1 per cent.

Under Eberstadt’s intermediate epidemic scenario, which assumes infection rates as high as 5 per cent in India and 3.5 per cent in China, the death toll could reach 56 million and 40 million respectively.

As southern Africa has found, a widespread HIV epidemic that kills workers in their prime undermines the incentive to invest in higher education and technical skills — crucial drivers of productivity. The pool of labour shrinks, as do savings, and direct investment and technology transfer can also suffer.

“These factors suggest that HIV breakout could have lasting economic consequences — in effect, cutting afflicted countries off from globalisation,” Eberstadt wrote.

Emerging markets bank Standard Chartered, which employs 28,000 people in more than 50 countries, is just one of a growing band of companies facing up to the economic threat of AIDS.

Extending an educational programme launched in Africa in 2000, Standard Chartered is sending 100 staff to a regional workshop in Kuala Lumpur next week to train them to spread the message about the disease across the bank’s Asian workforce.

“HIV/AIDS can affect productivity, employee morale, business costs, etcetera,” said Euleen Goh, Standard Chartered’s chief executive in Singapore. “It’s not just a health issue, it is also a business issue,” she said.

Based on the principle that life expectancy is a fairly good predictor of economic potential, Eberstadt calculates that under a mild epidemic, India’s output per working-age person would be two-fifths lower than it would have been in the absence of HIV. Under his intermediate scenario, output per worker would be no higher in India in 2025 than it is today.

For China, a mild epidemic would cut projected growth in output per worker by half; under the most pessimistic projection, Chinese productivity would decline in the next 25 years.

In both countries, overall gross national product growth would be cut by a third or more from what health-based predictions suggest in the absence of AIDS, Eberstadt said.

China's GDP would fall by 22.5 billion yuan ($2.7 billion) in the best case scenario over the next decade or 40 billion yuan in the worst, said a recent report compiled by the China Centre for Disease Control and Prevention and the Ministry of Health.

Given the looming crunch, Bhushan at the ADB said governments should be spending much more on AIDS prevention, especially because the burden of caring for sufferers falls disproportionately on poor households.

The ADB has commissioned research from Harvard University's School of Public Health that shows money spent fighting AIDS pays for itself more than three times over if healthcare costs, lost productivity and the economic value of lives saved are added up.

”We should be investing in HIV/AIDS prevention programmes so Asia doesn't go the way of sub-Saharan Africa,” Bhushan said.

($1=8.277 Yuan)

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