The Economic Impact of the 2014 Ebola Epidemic: Short and Medium Term Estimates for West Africa

WASHINGTON, October 8, 2014—In a follow-up to its recent report on the economic impacts of the Ebola epidemic on Guinea, Liberia, and Sierra Leone—the countries most heavily affected by the Ebola crisis–the World Bank Group on Wednesday released new figures citing the possible costs of the disease on the wider West African region.

The report highlights two scenarios: impacts on the region in the case of “Low Ebola”, in which the disease is contained by early 2015, cases stay around 20,000 and economic activity gradually increases; and “High Ebola”, in which the disease is contained more slowly, cases reach 200,000 and the outbreak worsens significantly into mid-2015.

In the “Low Ebola” scenario, according to the report, lost GDP for West Africa as a whole is estimated at $2.2 billion in 2014 and $1.6 billion in 2015. In the case of “High Ebola”, estimates suggest $7.4 billion in lost GDP for 2014 and $25.2 billion in 2015. Both cases assume at least some spread to other countries.

Factors contributing to the growing cost of Ebola include direct costs of the illness (government spending on health care) and indirect costs, such as lower labor productivity as a result of workers being ill, dying or caring for the sick.

But the majority of the costs stem from the higher costs of doing business within countries or across borders. These are largely due to “aversion behavior”, or changes in the behavior of individuals due to fear of contracting the disease, which has also left many businesses without workers, disrupted transportation and led to restrictions on travel for citizens from the afflicted countries.

Effects on Individual Countries

Ebola already is having a significant impact on Guinea, Liberia and Sierra Leone. The countries with the highest number of Ebola cases have seen more than 3,400 deaths, and disruptions to their farming, tourism, manufacturing and mining industries. Liberia, with the highest rates of infection, could see a contraction of 5.2% in its 2015 GDP in the High Ebola case, leaving the country more than $100 million poorer than it would have been.

Across West Africa, the Ebola epidemic is having some ripple effects.

• Nigeria
  The emergence of Ebola in Nigeria has led to fewer customers for shops and commercial businesses. The government has spent significant resources to successfully contain the disease and, like Cote d’Ivoire and Senegal, the country has placed some travel restrictions on its citizens. 
• Cote d’Ivoire
  So far, no cases of Ebola have been reported in Cote d’Ivoire, but the government has closed its borders with Liberia and Guinea and is imposing health checks on all visitors.
• Guinea Bissau
  The economic effects on Guinea Bissau, where no cases have yet been reported, are likely to be low, the report says, as a result the country’s limited trade with its regional neighbors. With support from the World Bank Group, the government has launched a community awareness campaign aimed at preventing Ebola within its borders. Estimates for Guinea-Bissau’s growth remain unchanged at 3%.
• Senegal
  Although Senegal did report one case of Ebola, the patient was successfully treated and the economic impact on the country has been minimal. But, the impact of Ebola on tourism could lead to a 1% drop in GDP annually. According to the report, several conferences have already been cancelled and incoming flights are carrying fewer passengers.
• Gambia
  Since the onset of Ebola in West Africa, estimates show that 65% of hotel reservations in Gambia have been already been canceled. If the crisis persists, the report says, Gambia could see deferrals or cancelations of foreign direct investment to its tourism and hospitality sectors.

Regional Impacts

According to the report, if the Ebola epidemic is contained by the end of 2014, the economic impacts on West Africa, including on Guinea, Liberia and Sierra Leone, could be lessened and economies would begin to recover and catch up quickly. If the crisis continues into 2015 as predicted, slower growth could cost the region $32.6 billion over 2014 and 2015 and lead to much higher levels of poverty.

The report calls for:

• Governments and their international partners to lay the groundwork for policies that will contain the epidemic and allay the fears of economic agents
• Increased injections of external financial support to help governments to continue to function as growth resumes
• Reestablishing investor trust so that as the epidemic is contained, domestic and international investment can return
• Continuing to invest in effective and resilient African health systems – including epidemiological surveillance – after the Ebola outbreak has been contained. 

Without these measures, as the report notes, “in addition to the immeasurable costs of lives lost, the loss of income in High Ebola could take years to recover”.

The impacts of Ebola on West Africa will be discussed on Thursday, October 9^th from 7:30 to 9:00 ET at a high level event featuring the presidents of Guinea, Liberia and Sierra Leone. The discussion will be streamed live at https://live.worldbank.org/impact-of-ebola-crisis