An astounding amount of Ebola’s economic impact is completely avoidable

JOHANNESBURG, South Africa — The tiny West African country of Sierra Leone began this year on a high, its economy racing ahead faster than almost any other in the world.

Then came Ebola.

Travel restrictions stopped the flow of goods and people. Markets were shut, farming disrupted and mining firms cut operations. Now, the World Bank says, instead of growing an expected 11.3 percent, Sierra Leone’s economy could see growth of just 8 percent this year — and zero in 2015.

This is the unseen toll of Ebola, which has killed nearly 3,000 people in West Africa since the outbreak began early this year, 597 of them in Sierra Leone. Surprisingly, the biggest economic impact has come not from the direct costs of the virus, but rather from so-called “aversion behavior” associated with fear of catching Ebola.

It is this fear factor that has led people in Sierra Leone, Liberia and Guinea — the three worst affected countries — to avoid work, abandon farms and close borders. On the ground, food prices have skyrocketed in response to production shortages and panic-buying.

The World Bank is warning that the Ebola epidemic could reverse years of economic gains in these developing countries. If the virus continues to spread, the economic cost could grow eight-fold by next year.

“This would deal a potentially catastrophic blow to their already fragile economies,” Jim Yong Kim, World Bank Group president, said in a recent media call.

During previous epidemics, including SARS and the H1N1 outbreak, fear and aversion behavior caused as much as 80 to 90 percent of the total economic impact, according to an analysis by World Bank economists.

“The sooner we implement an effective response and decrease the level of fear of Ebola's spread, the more we can limit the epidemic's economic impact,” Kim said.

Liberia, hardest hit by Ebola with nearly 1,700 people killed, has cut its growth forecast this year from 6 percent to just 2.5 percent. Liberia’s economy will likely contract next year if the outbreak isn’t contained, the minister of commerce and industry said Thursday.

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International mining companies have reduced Liberian operations, the service sector has slumped and incoming commercial flights have dropped from 27 a week to just six.

“Next year, if this outbreak lingers on, it’s likely to go into negative because the major operators in the mining sector have had to slow down operations,” Axel Addy told reporters in London. “Many of their technical staff have left the country.”

Aside from warnings of economic collapse, there are growing fears that the outbreak could cause political and social turmoil in West Africa if not brought under control.

The International Crisis Group said this week that the Ebola outbreak threatens to spiral into a political crisis that could destabilize the region. Sierra Leone and Liberia are still recovering from brutal civil wars, while Guinea has faced political instability, with a coup in 2008.

“The hardest-hit countries now face widespread chaos and, potentially, collapse,” the group said in a statement. “Adding social breakdown to the epidemic would create disaster perhaps impossible to manage.”