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Swine flu impact localised, says report

The impact of swine flu on the Mexican economy will be relatively small, according to a report from Capital Economics, although it has killed about 152 in the country.

There is no sign of widespread disruption to economic activity in the capital, says the firm in an economics update. Any talk of a shutdown is exaggerated.

More damage is likely to occur through reductions in tourism, which accounts for 9% of Mexicos GDP, Capital Economics says. While the World Health Organization has not recommended travel restrictions, America, which accounts for about 70% of tourists to Mexico, has warned against non-essential travel.

Warnings could cause significant damage if they remain in place for more than a few weeks, warns Capital Economics, but it adds that there will be little impact on the world economy, since tourists are likely simply to travel elsewhere.

Meanwhile, Mexican equities and currency have retained most of the gains they have made since markets began to rally in early March.

Unless the disease becomes much more widespread, swine flu is less of an economic risk to Mexico than the still perilous state of the world economy, says the firm, which expects global risk appetite to falter again and tip Mexico into recession.

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