Why unchecked Ebola outbreak could crash West Africa's economy (+video)
The World Bank estimates that if the epidemic spreads throughout West Africa it could set back the regional economy by as much as $32.5 billion in direct and indirect costs. The US recorded its first Ebola fatality today.
The Ebola outbreak in West Africa could cost the region’s economies $32.5 billion by the end of 2015 if the epidemic isn’t quickly contained, the World Bank said Wednesday. An effective containment that prevents its spread throughout the region, however, would have a much lower economic impact.
The three worst affected countries – Guinea, Liberia, and Sierra Leone – are already feeling the strain, and not just from the costs of combating the disease. Economists warn that in an age of globalization, nearby countries also face economic pressures of their own, even if they’re able to prevent the disease from crossing their borders.
David Evans, a senior economist at the World Bank, told the Associated Press that the epidemic has already forced mining operations to halt, businesses to close, and farming and investment to slow in West Africa. Prices of staple goods are shooting up while food supplies are dwindling across the region, the New York Times reports. Economic growth rates are projected to plummet as a result.
Most African countries have cancelled flights and closed their borders to Ebola-affected countries. Several international airlines, including British Airways, have also suspended flights to and from affected countries, further limiting international trade and business.
Given the fragile state of most West African economies, Forbes contributor Tim Worstall wrote in an opinion article that, “it’s entirely possible that the economic effects of Ebola will kill more than the disease itself.”
In such poor economies the absence of economic growth kills people: let alone what happens when economies start to shrink. With so many people at or just above the subsistence level it doesn’t take much of even a slowdown in the economy to push some of them below it.
The World Bank said Ebola’s trajectory was highly uncertain, but that failing to prevent its spread to neighboring nations could be economically catastrophic. Even if the disease is rapidly contained, the bank estimates the economic impact at over $9 billion. To put this in context, the combined GDP of the three worst affected countries in 2013 was $13.1 billion, according to the World Bank.
"The international community must find ways to get past logistical roadblocks and bring in more doctors and trained medical staff, more hospital beds and more health and development support to help stop Ebola in its tracks," said World Bank President Jim Yong Kim in a statement.
National Public Radio reports that the epidemic threatens economic interdependence across Africa:
Zemedeneh Negatu, managing partner for Ernst and Young in Ethiopia, says that the Ebola virus has awoken old African distrusts. "If this is the reaction we have when we have one outbreak," he says, "Then how are we going to continue to be Pan Africanist? How are we going to be saying we're going to grow together as Africa?"
Negatu says that just as with the Asian Tiger economies, African nations have to trade more with each other to grow economically. Ebola, he says, has exposed "the fault lines" in intra-African relations.
Five months into the epidemic, Ebola has killed more than 3,400 people and infected at least twice as many in Guinea, Liberia, and Sierra Leone, the World Health Organization estimates. The Centers for Disease Control estimated last month that the disease could infect 1.4 million people within four months, a worst-case projection.
The first Ebola patient diagnosed in the US died in a Dallas hospital Wednesday, the AP reports.