Businesses and governments alike, hoping to quell a panic that could further exacerbate the global recession, are taking extraordinary precautions against an outbreak of swine influenza.

The illness has killed nearly 150 in Mexico and over the weekend spread north into the U.S. Cases have appeared as far away as Asia.

This influenza variant, unlike its avian counterpart, which was contracted through direct contact with birds, appears to be spread through person-to-person contact, a point that has many health and government ministers worried. The number of U.S. citizens affected by the illness rose to 40 on Monday.

The U.S. State Department issued a travel advisory on Monday asking Americans to avoid non-essential travel to Mexico, while the European Union has asked Europeans to avoid travel to the U.S. and Mexico. 

Medical experts and economists said this flu outbreak comes at the worst possible time for struggling worldwide economies. A potentially widespread epidemic in the U.S. similar to the 1918 Spanish Influenza would cost the U.S. economy as much as $800 billion, according to medical experts, nearly the equivalent of the financial bailout package.

“It doesn’t take a lot of reports about influenza to cause the whole world to focus on a part of the world and say, ‘Let’s not go there,’” said Dr. Myles Druckman, a disease and pandemic expert with International SOS.

The tourism-heavy Mexican economy, already projected to see a 4% contraction this year according to the International Monetary Fund, will likely take a major economic hit from a sustained influenza scare, experts said. 

“We have spoken to several of our companies in Mexico who are activating their pandemic plans – asking people to telecommute. Companies are avoiding all non-essential travel,” Druckman said. 

The travel industry in particular was hit hard by investors on Monday as a result of the flu outbreak. Shares of hotel giant Starwood Hotels (HOT), air carriers such as Southwest Airlines (LUV) and American Airlines (AMR), and cruise companies like Royal Caribbean (RCL) and Carnival (CCL) were all down in Monday trading. Several U.S. airlines said they would allow passengers to rebook their vacations until concerns have abated.

Pandemic fears tend to stir up the media and this instance is no different. And it doesn’t look like the story is going away any time soon. 

As the media reports on the rising number of cases each day, Druckman said the coverage will contribute to long-term damage to the Mexican economy. 

There is also the travel advisories being issued by various governments about avoiding non-essential travel to Mexico. 

"Those advisories can be immensely powerful toward stopping travel to a particular country," said Dr. Howard Markel, a physician who studies historical pandemics on societies. "But you can look like Chicken Little and appear like you've overreacted at a cost to another country's economy."

The best example on how a travel advisory can decimate an economy is the recent example of the respiratory virus SARS infecting several thousand people in Hong Kong in 2003. At the height of that epidemic, the World Health Organization issued a travel advisory telling people to avoid non-essential travel to the region.

At the time of the WHO's advisory, the monthly arrivals of tourists fell to nearly half of its pre-SARS figures, according to the Hong Kong Tourism Board. The drop in tourism was so dramatic it pushed the Asian territory’s economy into a six-month recession and tourism activity did not recover for a year.

When SARS erupted in China, “tourism and services were hit hard,” said Bill Hubard, an economist with MIG Investments. “If the swine flu outbreak spreads, there could be a similar impact on North America.” 

Meanwhile, the pork industry issued a statement Monday saying pork is safe for consumption. 

The National Pork Producers Council quoted the Centers for Disease Control and Prevention and the U.S. Department of Homeland Security as follows:  “People cannot get the hybrid influenza from eating pork or pork products. Most influenza viruses, including the swine flu virus, are not spread by food. Eating properly handled and cooked pork products is safe.”