A bird flu pandemic would cost New Zealand 15 billion to 30 billion NZ dollars (10.5 billion to 21 billion US dollars) in the first year, New Zealand Treasury's report said Tuesday.
The loss to the economy would be around 10 to 20 percent of GDP in the year that a pandemic occurred, it said in a report.
The cost over four years would be up to 40 billion NZ dollars ( 28 billion US dollars).
"The economy would take several years to recover from a shock of this scale and losses could amount to 15-30 percent of annual GDP over the medium term," said the report.
The World Health organization (WHO) has warned that the risk of an influenza pandemic on the scale of the "Spanish flu" outbreak in 1918 has been raised by the emergence of a highly pathogenic strain of avian influenza, H5N1.
If bird flu mutates so it can be transmitted from human to human, the risk of a pandemic is seen as high by the WHO. Under the most severe scenario, the Ministry of Health estimates up to 40 percent of the population could contract influenza, with 2 percent of those infected dying. This could result in up to 33,000 deaths in New Zealand.
Treasury and the Reserve Bank are now helping develop plans in case of the pandemic. Issues of financial support or compensation are also being considered, including who should pay if businesses have to furlough their workers, and the possibility of support for industries heavily affected by a pandemic.