At the economic, social, security and demographic levels the AIDS epidemic is having an impact far more devastating than ever imagined. In addition to the untold grief and human misery caused by AIDS, the epidemic is wiping out development gains, decreasing life expectancy, increasing child mortality, orphaning millions, setting back the situation of women and children, and threatening to undermine national security in highly-affected societies.

Because AIDS kills people in the prime of their working and parenting lives, it represents a grave threat to development. By reducing growth, weakening governance, destroying human capital, discouraging investment, and eroding productivity, AIDS erodes the foundations on which countries seek to develop their societies and improve living standards. In the worst-affected countries, the epidemic has already reversed many of the development achievements of the past generation. Now, AIDS threatens to thwart the hopes of the next.

AIDS has a pronounced impact on growth, incomes, and poverty. Although different estimates exist, the World Bank calculates that AIDS may now be costing 24 African countries 0.5% to 1.2% of per capita growth each year. In some countries, conservative estimates indicate that the number of people living in poverty has already increased by 5% as a result of the epidemic.

Governments are suffering a drain on skills, reduced revenues, lower return on social investment, and reduced national security - while facing vast expenses on health and orphan care. Businesses of all types face higher costs in training, insurance, benefits, absenteeism, and illness. Reports are common of health care costs rising five- or- tenfold within a few years. AIDS is reducing the ratio of healthy workers to dependents and may cut productivity growth by as much as 50% in the hard-hit countries. In households, AIDS is impoverishing entire families as income-earners grow sick and die and families sell all their assets for care and for funerals. In agriculture, food security is lost as there are fewer people to tend the fields and fewer to pass on their skills to the next generation.

In South Africa and Zambia, studies of AIDS-affected households—most of them already poor—found monthly income fell by 66%–80% due to coping with AIDS-related illness (Steinberg et al., 2002; Barnett and Whiteside, 2002). In Thailand, a 1997 study showed when a person with steady employment died of AIDS, the household’s lifetime income loss was more than 20% greater than a household with non-AIDS-related deaths Pitayanon et al., 1997).

AIDS overtaxes social systems and impedes the health and educational development that enables poor people (especially children) to escape poverty. Life expectancy has plummeted by 20 years in some countries and the number of orphans is expected to more than double by 2010. This will pose unprecedented social welfare demands for countries already burdened by vast development challenges. Whole families dissolve as the parents die and children and dependent elderly are dispersed to others that might care for them.

By 2001, 14 million children had lost one or both parents to AIDS, and many millions more were affected. Risk factors such as missed opportunities for education, ill health and abuse and exploitation threaten their most fundamental rights and keep them enmeshed in poverty. The pandemic is deepening poverty in entire communities and societies, with children often being the first to feel the brunt of the deprivation.

In education, teachers and students are dying or leaving school, reducing both the quality and efficiency of educational systems. Health care systems in many countries are stretched beyond their limits as they deal with a growing number of AIDS patients and the loss of health personnel. Women in general, and girls in particular, are more vulnerable to HIV/AIDS and are disproportionately affected by the epidemic. They bear the greatest burden of care. Families remove girls from school to care for sick relatives or assume family responsibilities, thereby jeopardizing recent gains in female health, nutrition and education. This has an especially detrimental impact on girls' own development and leaves them more vulnerable to the epidemic. Girls who have not completed their schooling are less likely to obtain the earning power to increase their economic independence, and more likely to resort to transactional sex in order to survive. Reduced education for women also impedes national development.

Affects of AIDS on life expectancy and the structure of populations
HIV’s impact on adult mortality is greatest on people in their twenties and thirties, and is proportionately larger for women than men. In low- and middle income countries, mortality rates for 15–49-year-olds living with HIV are now up to 20 times greater than death rates for people living with HIV in industrialized countries. This reflects the stark differences in access to antiretroviral therapy. In low- and middle-income countries, mortality generally varies between two and five deaths per 1000 person years (PY) for people in their teens and twenties.

However, HIV-infected individuals in these age groups experience death rates of 25–120 per 1000 PY, rising to 90–200 per 1000 PY for people in their forties (Porter and Zaba, 2004). Until recently, low- and middle-income countries had extended life expectancy significantly. However, since 1999, primarily as a result of AIDS, average life expectancy has declined in 38 countries. In seven African countries where HIV prevalence exceeds 20%, the average life expectancy of a person born between 1995 and 2000 is now 49 years—13 years less than in the absence of AIDS. In Swaziland, Zambia and Zimbabwe, the average life expectancy of people born over the next decade is projected to drop below 35 years in the absence of antiretroviral treatment (UN Population Division, 2003).

Unless the AIDS response is dramatically strengthened, by 2025, 38 African countries will have populations which will be 14% smaller than predicted in the absence of AIDS. In the seven countries where prevalence exceeds 20%, the population is projected to be more than one-third smaller due to the epidemic (UN Population Division, 2003).