April 29 (Bloomberg) -- Mexican authorities raised the toll of suspected swine flu-related deaths to 159 while revising down the number of confirmed deaths to seven from 20. Officials said the rate of mortality has held steady over the past few days.

About 2,498 people have been diagnosed with symptoms related to swine flu in Mexico and 1,300 of those are hospitalized, Health Minister Jose Cordova said late yesterday. As hospitalizations declined in Mexico, a 23-month-old Texas child became the first swine-flu fatality outside of Mexico.

The flu outbreak is punishing businesses in the Mexican capital, which generates 22 percent of the country’s gross domestic product, according to Credit Suisse. Economic activity has fallen 60 percent since schools were first closed on April 24 and companies are losing about $87 million in revenue daily, according to local government estimates.

As retail shoppers stay home to avoid crowds and foreign tourists stay away, the flu is threatening to further shrink an economy already battered by the global financial crisis and drug cartel violence. All 35,000 restaurants in Mexico City were ordered shut yesterday. Wal-Mart de Mexico SAB said its 118 Vips and Porton restaurants in Mexico City are open for take-out only, which is allowed under the capital’s rules.

“The government needs to compensate us for closing,” said Floriberto Riveros, 60, who said he’d keep his seafood restaurant, Mariscos El Guero, open until officials come to tell him to shut it. “Even now, all I can cover is my staff’s wages with the reduced amount of customers.”

U.S. Fatality

The number of worldwide cases of the virus confirmed by laboratory tests reached 79 yesterday. The World Health Organization, acknowledging the growing threat of swine flu, raised its global pandemic alert to 4 from 3 on April 27, saying the disease is no longer containable.

U.S. President Barack Obama asked Congress for $1.5 billion in new funding for a possible outbreak after New York Mayor Michael Bloomberg said hundreds of students in the city may be infected. The new cases, including the death in Texas that was confirmed by U.S. health officials today, show the disease is taking root outside Mexico. In Mexico, the cases have been concentrated in the capital, the state of Mexico, and San Luis Potosi state, Cordova said.

Travel Restrictions

Mexico’s federal government has canceled classes for all students through May 6 and urged places where crowds gather, such as night clubs and theaters, to shut their doors. The city is mandating that all movie theaters, convention centers and gyms shut down, Mayor Marcelo Ebrard said.

French travel agents have stopped booking any trips to Mexico, U.K. tour company Thomas Cook canceled trips to Cancun, Cuba suspended flights to and from Mexico, Mexican newspaper Excelsior reported today, and Canadian airline Air Transat said it would suspend trips to Mexico. Argentina’s government said yesterday it will suspend direct flights from Mexico City until May 4.

Hotel occupancy has declined 10 percent nationwide because of the flu outbreak, the national association of hotels said, according to Mexican newswire Notimex.

The flu’s impact on Mexico’s economy will be short-term if the number of cases falls and schools reopen next week, similar to the effect of severe acute respiratory syndrome, or SARS, on Asia’s economy in 2003, said Gabriel Casillas, an economist at UBS AG. An increase in the pace of deaths or the WHO’s pandemic alert level may cause a greater economic impact, he said.

SARS Comparison

“They’re taking adequate measures,” Casillas said. “It may be short-term like SARS, or even faster.”

The economic impact of SARS, which killed more than 700 people in China, Hong Kong, Taiwan and Singapore, was short- lived because containment measures were implemented quickly, Barclays Capital said in a report. Retail sales, services, exports and tourism were particularly hard hit, the report said.

Economists shied away from making concrete forecasts for the economic impact of the swine flu outbreak, saying it was too early to determine.

“It’s premature to make an assessment,” said Paulo Leme, chief Latin America economist at Goldman Sachs in Miami. The outbreak “affects retail services and economic activity more broadly. It temporarily undermines confidence.”

Victor Villegas, marketing chief in Mexico for Cinepolis, the largest movie-theater chain in Latin America with 216 locations, said the government hasn’t said when theater doors can open again.

‘No Indication’

“We have no idea,” he said. “We’ve been given no indication.”

For Flavia Chavez, a 30-year-old teacher, the swine flu outbreak, a 5.6-magnitude earthquake in Mexico City on April 27 and forecasts for an economic contraction this year are a warning from above that society has gone astray.

“These are all biblical prophecies that we are living -- you can find them right there, in the Bible,” said Chavez, who was in Mexico City’s airport on her way to catch a flight to Toronto. “What humanity needs is to change spiritually, or it will just get worse.”

Doctors checked the medical condition of all people entering the Senate yesterday and reporters were prohibited from accessing the chamber, spokesman Hector Rivera said. Lawmakers in the lower house of Congress conducted the session with face masks.

Hospitals

Normal hospital services were interrupted as well. Mexico City’s Siglo XXI hospital, where more than 2,300 gravely injured people were saved during the 1985 earthquake that killed thousands, stopped allowing visitors in some wings and canceled many outpatient procedures and appointments. The complex, which houses more than six hospitals and has its own subway stop, is run by the Mexican Social Security Institute.

Jacobo Rivera and his son Israel, 10, waited outside of the Hospital Infantil de Mexico in Mexico City. Israel, who fractured his hip recently, was turned away from the hospital for a scheduled appointment. The children’s hospital had cancelled all non-emergency appointments. Rivera and his son traveled three hours from the neighboring state of Mexico.

“This wasn’t easy for us to come here for the appointment, especially since Mexico City is the most concentrated center of the disease,” Rivera said. “I had no idea the hospital was closed.”

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net; Crayton Harrison in Mexico City at tharrison5@bloomberg.net

Last Updated: April 29, 2009 09:28 EDT