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Ebola Could Devastate West African Economies, World Bank Says U.N. Leader Plans Stronger Presence in Ebola Zone
(about 9 hours later)
The three West African countries most affected by Ebola could experience a “potentially catastrophic blow” to their economies because of the epidemic, the World Bank Group warned Wednesday. The United Nations secretary general, Ban Ki-moon, said on Wednesday that he planned to establish a new on-the-ground mission in West Africa to coordinate the struggle against Ebola, a move that signaled his concern with the response so far and the limitations of the World Health Organization’s abilities.
The outbreak could cut gross domestic product by nearly 12 percent in Liberia and nearly 9 percent in Sierra Leone in 2015 if it is not curbed, according to the report. The impact to Guinea would be less severe, at around 2 percent. In an interview with the editorial board of The New York Times, Mr. Ban said that he intended to ask the General Assembly to support his plan in order to demonstrate the unanimous global concern about Ebola, the deadly virus that is spreading at exponential rates in three Western African countries.
A fear of contagion and what the bank referred to as “aversion behavior” is driving most of the economic losses. Places of employment are being closed, transportation is being disrupted, and vital links with other nations by air and sea are being cut, the analysis found. Mr. Ban is scheduled to address a Security Council meeting devoted to Ebola on Thursday afternoon and said he was hoping to convene a special General Assembly session on Friday.
The pattern is consistent with recent infectious disease outbreaks, including SARS and H1N1 flu, during which behavioral changes accounted for 80-90 percent of the economic losses, according to bank estimates. “We don’t need all this time-consuming, so-called consultation, or consensus building,” Mr. Ban said. “There is a consensus already that this is very serious and urgent. This spreads and doubles in three weeks’ time. So it’s a matter of take action. We have to save the people.”
“The fear of contagion has helped fuel an economic crisis,” Dr. Jim Yong Kim, the bank’s president, said in a news conference. If the virus spreads to other African nations, the costs could reach billions of dollars, “depending on the scenario, potentially many billions of dollars,” Dr. Kim said. “The best case scenario is still not in sight.” “That’s the main purpose, to take immediate action,” he said.
A draft Security Council resolution, proposed by the United States, calls on member states to provide assistance, including medical personnel and field hospitals, and urges countries in the region to lift travel restrictions and keep borders open. The resolution says the spread of Ebola in Africa “constitutes a threat to international peace and security,” and follows President Obama’s announcement on Tuesday that the United States was preparing to offer medicine, equipment and up to 3,000 military personnel as part of the effort to curb the virus.
It was not immediately clear how an increased United Nations presence in the most afflicted countries — Liberia, Sierra Leone and Guinea — would give the organization more power to contain the crisis. But Mr. Ban said it would emphatically signal that places ravaged by Ebola are not pariahs to be shunned and avoided — a message he has sought to reinforce in his conversations with other world leaders.
“There is a huge psychological panic and fear that nobody wants to go in,” he said. “So we have to give some sense of assurance that there is full protection and support by the international community.”
Asked when the new mission would start, he said. “It should not take a couple of months, it should take a couple of weeks.”
The W.H.O. said that as of Tuesday, Ebola cases in the three most affected countries totaled 4,963, with 2,453 deaths. The organization has predicted that many more thousands of people will be infected.
Mr. Ban spoke as the forecast for the most afflicted countries appeared to worsen. The World Bank Group reported on Wednesday that those countries could experience a “potentially catastrophic blow” to their economies.
The outbreak could cut gross domestic product by nearly 12 percent in Liberia and nearly 9 percent in Sierra Leone in 2015 if it is not curbed, according to the report, which acknowledged considerable uncertainty in its estimates. The impact in Guinea would be less severe, at around 2 percent.
A fear of contagion and what the bank referred to as “aversion behavior” is driving most of the economic losses. Panic is closing places of employment, disrupting transportation and severing air and sea links with other nations, the analysis found.
The pattern is consistent with infectious disease outbreaks elsewhere, including SARS and H1N1 flu, during which behavioral changes accounted for 80 percent to 90 percent of economic losses, according to bank estimates.
“The fear of contagion has helped fuel an economic crisis,” Dr. Jim Yong Kim, the bank’s president, said in a news conference. If the virus spreads significantly to other African nations, the costs could reach, “depending on the scenario, we think potentially many billions of dollars,” Dr. Kim said. “The best-case scenario is still not in sight.”
Decreased labor supply is a smaller factor in the losses in West Africa, stemming from illnesses, deaths and caregiving. These are related not only to Ebola, but also to other diseases left untreated because health systems have collapsed as medical workers fell ill or refused to work because of the risks and a lack of protective supplies.Decreased labor supply is a smaller factor in the losses in West Africa, stemming from illnesses, deaths and caregiving. These are related not only to Ebola, but also to other diseases left untreated because health systems have collapsed as medical workers fell ill or refused to work because of the risks and a lack of protective supplies.
The bank said that both food prices and inflation were rising as a result of “shortages, panic buying, and speculation.” Exchange rates were also increasingly volatile. Hazard pay for health workers is needed to help reopen the services, but is still not provided, Amara Konneh, Liberia’s finance minister, said in a telephone interview. He said the country was working with donors, including the World Bank and the United States government, to support roughly $60 million for the additional pay. “We appreciate the response to date but we need more assistance quite frankly,” he said.
The bank’s analysis was based on World Health Organization’s epidemic projections released several weeks ago. But on Tuesday, the W.H.O. issued an even more dire report after finding that the number of Ebola cases has doubled in the past three weeks. The World Bank’s prediction, Mr. Konneh said, “is not new to us, but rather it confirms what we have been saying since the onset of the outbreak.”
Still, Dr. Kim said that 80-90 percent of the economic impact could be blunted “if we get an effective response on the ground in the next few months.” The bank said that both food prices and inflation were rising as a result of “shortages, panic buying and speculation.”
The bank prepared estimates of a rosier scenario, with strong Ebola containment efforts, which it said could reduce losses in economic output in 2015 to between 1 and 4 percent in the three countries, totaling $97 million — as opposed to $809 million in the more severe scenario. In 2014, economic output is expected to drop $359 million. Dr. Kim said that most of the economic impact could be blunted “if we get an effective response on the ground in the next few months.”
On Tuesday, the United Nations said that a billion dollars was needed to fight the epidemic. Up to several billion dollars for aid, fiscal support, and screening efforts to prevent the virus’s spread to additional countries could be cost-effective, the bank analysis said. The bank pledged $230 million in financing in August to aid the anti-Ebola effort.
The three most affected countries have small economies, accounting for only about 5 percent of the G.D.P. in West Africa. If the epidemic were to reach larger economies in neighboring countries, “that impact would be much, much larger,” said Francisco H. G. Ferreira, the bank’s chief economist for Africa, at the news conference. “That’s part of the contingency that’s being planned for.”