Section II: Economic Impacts

Jefferis, Keith^a; Kinghorn, Anthony^b; Siphambe, Happy^c; Thurlow, James^d

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AIDS 22():p S113-S119, July 2008. | DOI: 10.1097/01.aids.0000327631.08093.66

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To measure the impact of HIV/AIDS on economic growth and poverty in Botswana and estimate how providing treatment can mitigate its effects.

Demographic and financial projections were combined with economic simulation models, including a macroeconomic growth model and a macro–microeconomic computable general equilibrium and microsimulation model.

HIV/AIDS significantly reduces economic growth and increases household poverty. The impact is now severe enough to be affecting the economy as a whole, and threatens to pull some of the uninfected population into poverty. Providing antiretroviral therapy can partly offset this negative effect. Treatment increases health's share of government expenditure only marginally, because it increases economic growth and because withholding treatment raises the cost of other health services.

Botswana's treatment programme is appropriate from a macroeconomic perspective. Conducting macroeconomic impact assessments is important in countries where prevalence rates are particularly high.

The detrimental impact of HIV/AIDS on public health in Africa is well documented, and most governments now recognize the need to mitigate its effects on human welfare. The macroeconomic impact of the epidemic is, however, not clear cut. Although less overt than health effects, macroeconomic impacts can become important. For example, if HIV/AIDS lowers economic growth then welfare losses will extend beyond infected individuals and their households. Fortunately, in most countries the epidemic has not been severe enough to have discernable macroeconomic effects. These impacts could, however, be substantial in southern Africa, where HIV prevalence is particularly high. For example, approximately one in every four adults in Botswana is now infected, and life expectancy fell from a peak of 62 years to 46 years in 2001. In such a case, indirect macroeconomic impacts may become important, although the magnitude and direction of these impacts depend on many factors and are difficult to predict a priori. Although gross domestic product (GDP) growth is likely to be reduced, per capita incomes and unemployment could rise or fall. Much of the early analysis of the economic impact of HIV/AIDS concluded that GDP per capita was likely to rise. More recent modelling concludes that indirect macroeconomic impacts may significantly worsen the already severe direct economic impacts felt by the infected population, while also reducing incomes among the uninfected. In such cases, macroeconomic impacts would further underscore the need to mitigate the effects of HIV/AIDS

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