Economic Impact of Ebola Epidemic Could be E-normous
CBS reports that the World Bank has just issued a dire warning that the economic impact of Ebola could be enormous. An institution usually known for carefully weighed economic statements says that the economic impact of Ebola could be “catastrophic” even if the epidemic doesn’t spread beyond Africa.
By the end of 2015, the economic impact of Ebola in West Africa alone could reach $32,600,000,000. Imagine what the impact would be if the Ebola epidemic were to hit more complexly developed regions of the world, such as Europe or the U.S.
Here is a summary of points made in the CBS article about the economic impact of Ebola:
- The economic impact of Ebola in Guinea, Liberia and Sierra Leone is already a serious crisis.
- Ebola could infect 1.4 million people by mid-January in two nations alone — Sierra Leone and Liberia.
- The first two flights bringing sick American missionaries back from West Africa cost $2 million.
- Governments are already planning to spend large sums to fast-track new airport screenings in order to prevent contagion into their countries.
- The U.S. Coast Guard has announced additional protocols for screening of ship-bound traffic.
- The U.S. government has committed a large number of military and humanitarian resources to combat the Ebola epidemic in West Africa.
- Fear of Ebola is causing neighboring countries to close their borders and airlines and businesses to suspend commercial activities in the most affected nations.
- 3,400 people have died in West Africa, about half the total of those who have the disease.
- With that death rate, West Africa alone could expect as many as 600,000 dead people by mid-January if the World Bank’s worst-case scenario pans out. The cost of funerals and the loss of laborers would be astronomical.
Additional facts presented by the BBC about the economic impact of Ebola epidemic:
- Sierra Leone’s Agriculture Minister Joseph Sam Sesay told the BBC, “The economy has been deflated by 30% because of Ebola.” President Ernest Bai Koroma revealed this staggering news to ministers at a special cabinet meeting.
- The Ebola epidemic has already spread throughout the nation of Sierra Leone (12 out of 13 districts to be exact).
- Road blocks, crucial to containing the outbreak in Sierra Leone, are preventing the movement of goods and labor. “We are definitely expecting a devastating effect not only on labour availability and capacity but we are also talking about farms being abandoned by people running away from the epicentres and going to areas that don’t have the disease.”
- The limiting factor on the movement of agricultural labor right at planting season means food shortages down the road, and the ag economy will be decimated.
- Another serious economic impact of the Ebola epidemic in Sierra Leone is the rise in inflation and pressure on its national currency.
- The Liberian economy had been expected to grow by 5.9% this year but the country’s Finance Minister says this is no longer realistic due to a slowdown in the transport and services sectors and the departure of foreign workers because of Ebola.
- The world’s largest steelmaker ArcelorMittal has seen work disrupted in its iron ore mine as the mine evacuates foreign staff members and puts its local labor on leave.
- In Sierra Leone, commercial banks have reduced their hours of business by two hours to reduce contact with clients.
- The country’s tourism industry has taken a severe knock – some hotels are empty and are laying off staff.
- The closure of external borders is limiting imports and exports.
- Stereotypes of Africa as a place of poverty and disease have started to re-emerge and could cause the collapse of the nascent African Renaissance.
What makes all this very interesting is that the final economic toll of Ebola will not be driven by the direct costs of the disease itself — expensive drugs, sick employees, and busy caregivers. It will be driven by how much those who are not infected trust their governments. If public action is not seen as containing the outbreak and fear of contagion rages, workers will not go to work, business and factories will stay closed, and the economy will collapse. This is called “aversion behavior”, a term you may want to keep in mind. (“The Economic Impact of Ebola,” The Huffington Post)
Other serious concerns about the economic impact of Ebola
There is far more at stake than just the cost of fighting the epidemic. Consider the following likely outfalls to any country that develops a serious Ebola epidemic:
- Loss of tourism to countries affected by the Ebola epidemic. (“There are a lot of other beautiful places we can visit that aren’t crawling with Ebola” or “Let’s vacation closer to home this year.”)
- Loss of business flights to countries badly affected by Ebola. (“Do we really need to go there for this meeting?”)
- If the World Bank’s worst-case scenario in the sections above plays out, images of hundreds of thousands of dying people in West Africa alone would cause world markets to panic. International investors are already nervously watching the Ebola outbreak unfold, and this is happening at a time when the stock market is already showing a lot of volatility. Each new exacerbating bit of economic news increases the risk of a stock market crash.
- In badly affected nations, governments will spend more on health care and containment of the Ebola epidemic inside of their borders while collecting less in taxes — all at a time when they are already seriously short on funds.
- The growing needs of stricken countries will require financial resources from non-stricken countries (already deeply mired in debt) if those countries are going to avoid a global pandemic.
- More trade barriers arise in non-African countries like those already seen at the borders of West African countries, slowing down the velocity of global trade for everyone.
If the number of ill people in Sierra Leone and Liberia reaches 1.4 million by mid-January 2015, how can the Ebola epidemic possibly remain contained in West Africa? That is such a vast number of people wanting to crawl around the globe that containment would surely become impossible to maintain. It’s difficult to maintain even now, with only about 7,000 people infected.
It’s entirely possible that [the] economic effects will kill more people than Ebola itself. A macabre but true thought.
Of course, the dire economic impact of the Ebola epidemic may still be averted if the nations of this world rapidly pull together resources to fight it while these three West African nations still have the disease largely contained within their own borders and if everyone is careful enough in their protocols not to bring the disease back home.
For deeper reading on the Ebola epidemic:
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