The market can breathe a collective sigh of relief. Two suspected Ebola cases in Brazil have tested negative, a development that vindicates the UK funded surveillance system which flagged them. For a brief moment, the spectre of a global health crisis sent shivers through emerging market currencies and commodity prices.
But efficient detection systems, as any economist will tell you, are the bedrock of stability. This episode underscores the value of investing in robust public health infrastructure. The cost of such systems is trivial compared to the economic carnage of an uncontrolled outbreak.
Brazil’s swift ruling out of Ebola is a textbook example of fiscal prudence: a small upfront outlay preventing a catastrophic liability. The markets have already adjusted. Gilt yields remain unmoved, and the pound holds steady.
In the world of high finance, this is a non event, but a reassuring one. It proves that government spending, when targeted and effective, can yield returns that go beyond the balance sheet. The bottom line: public health is an asset class that never defaults.
