The IMF released its analysis, The Global Economic and Financial Impact of an Avian Flue Pandemic and the Role of the IMF, earlier this month.

The multilateral concluded that a severe pandemic would lead to “declines in asset prices and widening of credit spreads, both for corporations and emerging markets. Commodity prices could be expected to decline reflecting weaker aggregate demand, but this may be offset by potential supply disruptions for key commodities such as oil.” These asset price declines could put stress on bank balance sheets, making it difficult for them to meet their regulatory capital and other requirements.

Investors exposed to emerging markets—one of the most popular asset classes in recent years—may suffer. The report’s author states: “Net flows to emerging markets countries might decline as a result of some combination of possible operational disruptions in the financial systems, a loss of confidence in more vulnerable countries and abrupt shifts in risk preferences.” The extent of the problem will depend on whether governments can maintain confidence by dealing effectively with the emergency.

The report also warns that, if financial institutions without adequate contingency plans suffer high absentee rates, it could “prevent transactions from being completed and obligations from being met.” This could disrupt market trading and settlement processes, and spill over from one jurisdiction to others.