Swine flu could hit investment: Moody’s Economy.com

April 30th, 2009 - 2:01 pm ICT by IANS  

New Delhi, April 30 (IANS) Swine flu scare may adversely impact investment and business confidence in India, the research arm of rating agency Moody’s said Thursday.
“The swine flu scare will likely weigh on wider economic activity such as household consumption and business investment,” Sharman Chan, an economist with Moody’s Economy.com, said.

“Tourism and trade, which already began to show signs of fatigue in the December quarter, may experience a further blow. Asset prices are bound to retreat if the outbreak worsens and discourages investment,” Chan added.

According to Moody’s Economy.com, although India itself may not have upset investors, a general decline in confidence worldwide could spark repatriation of funds from stock markets.

“This will not only be a drag on stock prices, but will again exert downward pressure on the rupee,” Chan added.

The global swine flu outbreak is a major concern to the cash-strapped Indian government, with expenses on preventative measures - or medical treatment when needed - will further weigh on India’s fiscal deficit, she said.

The Indian rupee has traded between $50-$52 for much of the past two months. Amid still-fragile investor sentiment, although a net capital inflow into equities occurred in April, another round of net outflow cannot be ruled out, Moody’s said.

Officially, no case of swine flu has been reported yet in India.

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