A bird flu outbreak could cost the region between $100 billion and $300 billion, with the services sector expected to take the biggest beating, the Asian Development Bank (ADB) said in its annual Asian Development Outlook report for 2006 released on Thursday.

"The possibility of an influenza pandemic is a major uncertainty facing the region's economy," the report said, noting that the virus has been spreading quickly in poultry populations.

The virus has "already severely curtailed" the export of poultry products, leading to the culling of millions of birds from East Asia to Africa, Europe and the Middle East.

Estimated costs to the sector range from $10 to $15 billion and as backyard farming is a key source of income for many rural families "avian flu has already contributed to the already high level of rural poverty," the report said.

The World Health Organisation's (WHO) most optimistic estimates alone project deaths of up to seven million from a global avian flu pandemic.

The ADB report noted that the outbreak of the Severe Acute Respiratory Syndrome (Sars) in 2003 led to a major but temporary economic shock.

Billions at risk

Based on this experience and on epidemiological estimates by the WHO, "avian flu would lead to a severe economic shock in the Asia Pacific region, with economic consequences in the range of $100 billion to $300 billion."

At its worst, the report said, a major outbreak could essentially halt economic growth for one year and throw the world into the first global recession since 1982.

With people reducing human-to-human contact for fear of catching the virus, the services sector would also be affected. Tourism, management consulting, and international banking would be among those expected to be hardest hit.

"Investment decisions would be delayed and trade would be slow," it said. While the impact would be heavy, it would also be short lived.

"Economic activity would likely return to normal within one year and reach pre-pandemic levels in two to three years," the ADB said.