The Zika virus has continuously made headlines in the past months. However, aside from the health risks it poses in Latin America, it also affects its economy.

Brazil and Zika Virus

Brazil has been in an economic downturn since the 1930s and Zika virus is making things worse. The country is already facing several economic issues, like low commodity prices, political uncertainty and the ongoing bribery scandal involving the government-run oil company, Petrobas. In fact, their economy is forecast to shrink by 3.5 percent this year.

The Zika virus, which is linked to microcephaly, urges pregnant women to reschedule their flights in the country. This affects Brazilian tourism. However, pregnant women are not a large subset of travelers.

Economists are hopeful that with Brazil's economy being so low versus the U.S. dollar, many Brazilians will opt to stay at home during vacation. This could keep the tourism sector of the country alive, even if foreigners will shy away from the region.

"The negative impacts from Zika ... [could be] counteracted by a general increase in domestic tourism that we're expecting in 2016 because of the situation with exchange rates," said Amanda Bourlier, an analyst at Euromonitor International.


Airline Bookings Fall

Meanwhile, a new report suggests that airline booking to Latin America declined after U.S. warns travelers about the Zika virus.

Booking to Latin America regions hit with the mosquito-borne virus fell by 3.4 percent from a year ago, following the U.S. Centers for Disease Control and Prevent travel advisory on Feb. 10. When the World Health Organization called the Zika outbreak an international emergency on Feb. 1, it accelerated the downturn, with bookings plunging 10 percent between the said dates.

The ForwardKeys study reported that there were 3 percent fewer bookings made to Brazil between Jan. 15 and Feb. 10 compared to the number of bookings a year ago. Tourist hotpots with Zika outbreaks, like Martinique and U.S. Virgin Island, experienced steeper declines at 24 percent and 27 percent, respectively.

"We have to watch (for developments on the virus) because if it really should explode, obviously it will have an effect on all of the Caribbean routes," said Bjon Kjos, Norwegian Air Shuttle ASA Chief Executive.

Economic Impact

The economic impact of Zika virus in Latin America and the Caribbean may reach 3.5 billion dollars this year. Unfortunately, if the mosquito-borne disease is not contained quickly, the said figure may rise, according to World Bank.

At the time, the initial estimate of economic impact was 0.06 percent of the annual gross domestic product across the region. However, this could be more than one percent in some countries, especially in those areas that depend on tourism, like the Caribbean.