This was in the Moscow Times today
Thursday, May. 16, 2002. Page 1
Counting the Cost of AIDS on GDP
By Torrey Clark
Staff Writer Speaking in a language that President Vladimir Putin is sure to understand, the World Bank warned on Wednesday that AIDS is threatening not only the health of Russians but the health of the whole economy.
If Russia fails to take urgent steps to stem the rampant spread of HIV, Putin could see his hopes for strong annual growth over the next decade evaporate into thin air, according to a World Bank model to forecast the economic impact of the disease.
"If Russia wants to see economic growth of 5 percent or more per year to catch up economically with OECD countries, it had better do something now," Christof Rßhl, the chief economist of the World Bank's Moscow office, said in an interview. "HIV is a time bomb."
As HIV spreads through society, the economy suffers from a decline in the workforce while enormous health-care costs eat up money that is desperately needed for investment in industry and infrastructure, Rßhl said.
As a result, if current transmission rates slow down and 2.32 million people become HIV positive by 2010, gross domestic product would be depressed 0.15 percent, according to the World Bank's optimistic scenario. But the conservatively pessimistic scenario indicates that if 5.25 million people become HIV positive, a staggering 4.14 percent would be shaved off GDP.
"[Even 1 percent] does matter in a country that needs very high growth rates to catch up to other countries," Rßhl said in presenting the model, the first in Europe, at a news conference.
Currently, 194,033 Russians are registered as HIV positive, but the actual number is probably closer to 1 million, said Federal AIDS Center head Vadim Pokrovsky, who consulted on the model. Almost none of those infected are receiving modern anti-retroviral treatment, he said.
"This 1 million people will die in about 10 years time," Arkadiusz Majszyk, the UNAIDS representative in Russia, said by telephone.
The disease remains largely invisible in part because there have been so few AIDS-related deaths in Russia, only 2,277 since 1987. But within three years from 6,000 to 9,600 people per year could be dying, according to the World Bank's estimates.
In addition, most of the people infected are 15- to 30-year-old intravenous drug users, who receive little sympathy from the public. In 2001, almost 93 percent of all registered HIV cases were drug users. Nearly 77 percent of all registered cases are male, 82 percent of whom are in the 15- to 30-year-old age group. The same demographic trend is seen among women, with 87 percent of cases in the 15- to 30-year-old age group.
HIV has begun moving into the general population through sexual transmission, Pokrovsky said. In 2001, 4.3 percent of registered cases were due to sexual contact with non-intravenous drug users, nearly triple the number of cases the year before.
HIV is thus striking at the core of the workforce for the next few decades, and they are the parents of the next generation, experts warned. This makes the toll particularly onerous for Russia, where the population is already in a free-falling decline. "In Russia no one is yet taking HIV seriously as an influential factor on the economy," Majszyk said. "Even the social aspect -- how much it can destroy the social system -- is not yet taken seriously.
"Another generation will not be born to the people who are dying. The demographical damage will be quite serious."
The epidemic could slash the total labor market by 1.2 percent to 11.5 percent, according to the World Bank's model. "The fact that Russia has a declining population and AIDS affects mostly young people makes the economic consequences worse," Rßhl said.
Moreover, the overall effectiveness of the labor market drops as HIV infections grow. Upon finding out they are HIV-positive, people tend to be 13 percent less productive due to psychological and physical stress, said Vyacheslav Vinogradov, a professor at the Center for Economic Research and Graduate Education at the Czech Academy of Sciences, one of the developers of the model.
"Over the last two years, the epidemic is growing very quickly in regions where industry is increasing the standard of life, such as Tyumen, Khanty-Mansiisk and Yamalo-Nenetsk, where oil and gas are located," Majszyk said. "This means industry will be affected as well."
The federal budget has a mere 160 million rubles ($5 million) earmarked for the fight against HIV and AIDS, of which about 100 million rubles is for treatment. The regions are expected to come up with another 200 million rubles for treatment, Pokrovsky said.
Anti-retroviral drugs currently cost $9,000 per infected person per year, although South Africa and Brazil have bargained down the price to $3,000.
"Even with high treatment costs, society is better off paying now. As HIV moves into the general population, the future economic savings will outweigh the fiscal costs," Rßhl said.
The Russian model can be adapted for use in other countries and is already sparking interest from the Ukraine, said Julian Schweitzer, the World Bank's director for Russia.
