It is exceptionally difficult to gauge the economic impact of the epidemic. Many factors apart from AIDS affect economic performance and complicate the task of economic forecasting - drought, internal and external conflict, corruption, economic mismanagement. Moreover, economies tend to react more dramatically to economic restructuring measures, a sudden fuel shortage, or an unexpected change of government, than to long, slow difficulties such as those wrought by AIDS.

But there is growing evidence that as HIV prevalence rates rise, both total and growth in national income~ gross domestic product, or GDP- fall significantly. African countries where less than 5% of the adult population is infected will experience a modest impact on GDP growth rate. As the HIV prevalence rate rises to 20% or more, GDPgrowth may decline up to 2% a year.

In South Africa, the epidemic is projected to reduce the economic growth rate by 0.3-0.4% annually, resulting by the year 2010 in a GDP170/0 lower than it would have been without AIDS and wiping US $22billion off the country's economy. Even in diamond-rich Botswana, the country with the highest per capita GDP in Africa, in the next 10 years AIDS wil lslice 20% off the government budget, erode development gains, and bring about a 13% reduction in the income of the poorest households.