By Daniel Bases

NEW YORK, April 30 (Reuters) - The deadly new strain of flu that has hit Mexico the hardest could result in economic growth contracting by 0.3 percentage points a week, HSBC said in a research note distributed on Thursday.

A view on the impact for Mexico from Merrill Lynch was not as deep.

Mexico began shutting down parts of its economy on Thursday to slow the spread of the flu as officials urged increased worldwide precautions against an imminent pandemic.

"We estimate that the measures taken to face the H1N1 influenza in Mexico could imply an annual GDP contraction of around 0.3 percent for each week the problem could last," HSBC said in a research report dated April 29.

"If, for example, we assume that the total length of the problem were three weeks, then the impact could be nearly one percentage point less growth, bringing our current -3.3 percent estimate to around -4.2 percent," HSBC economists Juan Trevino and Sergio Martin wrote.

The firm said the estimate relies on a set of rigid assumptions.

These include overlooking seasonal factors, vacation days, a limit to the flu's geographical impact to just around Mexico City, a curtailing of only the commercial food and lodging industry around the capital and a complete stop to both tourism and leisure activities on a national level.

"As a result, our estimate should be taken with caution and be considered only as a reference for all purposes," HSBC wrote.

Much of Mexico's wealth is generated in the capital Mexico City and its suburbs.

The outlook for Mexico's economy has become increasingly miserable in recent weeks, with some analysts predicting it could contract by 5 percent this year. The latest central bank poll of analysts saw GDP contracting over 3 percent.

Separately, Merrill Lynch's chief Latin American economist, Felipe Illanes, told investors in New York that the likely impact of the virus will result in less than half a percentage point drop in gross domestic product for the year.

Illanes, speaking at the EMTA Spring Forum, said the flu would likely "shave less than 50 basis points off this year's growth." EMTA is a trade association for emerging market finance professionals.

But in a follow-up interview with Reuters, Illanes said the exact figure would be published on Friday, adding, "A lot depends on what kind of policy responses are taken by the government. It also depends on whether the U.S. orders the borders to be closed. We just don't know yet."

Illanes said that before the flu outbreak it was expecting Mexico's economy to contract 3.2 percent.

Using the example of the Severe Acute Respiratory Syndrome (SARS), which killed more than 800 people around the world in 2003, Illanes said Mexico could benefit later in the year from pent up demand as a result of the slowdown caused by the flu. (Editing by Christian Wiessner)

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