Publication: The Economic Impact of the 2014 Ebola Epidemic : Short- and Medium-Term Estimates for West Africa
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2014-11-20
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2014-11-20
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Beyond the terrible toll in human lives and suffering, the Ebola epidemic currently afflicting West Africa is already having a measurable economic impact in terms of forgone output; higher fiscal deficits; rising prices; lower real household incomes and greater poverty. These economic impacts include the costs of healthcare and forgone productivity of those directly affected but, more importantly, they arise from choices by others to avoid exposure to the disease, called 'aversion behavior'. This report provides a systematic analysis of the channels of economic impact and the likely magnitude of that impact for Guinea, Liberia, and Sierra Leone, as well as West Africa as a whole. The short-term (2014) impact of Ebola on economic output is on the order of US$359 million in foregone output in 2013 prices. Two alternative scenarios are used to estimate the medium-term (2015) impact of the epidemic. A 'Low Ebola' scenario corresponds to rapid containment within the three most severely affected countries, while 'High Ebola' corresponds to slower containment in the core three countries, with some broader regional contagion. The estimates of the GDP lost as a result of the epidemic in the core three countries for 2015 alone sum to US$97 million under Low Ebola (implying some recovery from 2014), and US$809 million under High Ebola (in 2013 dollars). Over the medium term, however, both epidemiological and economic contagion in the broader sub-region of West Africa is likely. This report uses a multi-country general equilibrium model to estimate the medium-term impact on output for West Africa as a whole. Under Low Ebola, the loss in GDP for the sub-region is estimated to be US$2.2 billion in 2014 and US$1.6 billion in 2015. Under High Ebola, the estimates are US$7.4 billion in 2014, and US$25.2 billion in 2015. This analysis shows that the economic impacts are already very serious in the core three countries - particularly Liberia and Sierra Leone - and could become catastrophic under a slow-containment, High Ebola scenario. In broader regional terms, the economic impacts could be limited if immediate national and international responses succeed in containing the epidemic and mitigating aversion behavior. If, on the other hand, the epidemic spreads into neighboring countries, some of which have much larger economies, the cumulative two-year impact could reach US$32.6 billion by the end of 2015 - almost 2.5 times the combined 2013 GDP of the core three countries.
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“World Bank Group. 2014. The Economic Impact of the 2014 Ebola Epidemic : Short- and Medium-Term Estimates for West Africa. © http://hdl.handle.net/10986/20592 License: CC BY 3.0 IGO.”
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Publication The Economic Impact of the 2014 Ebola Epidemic : Short and Medium Term Estimates for West Africa(Washington, DC, 2014-10-07)The 2014 outbreak of the Ebola virus disease in West Africa has taken a devastating human toll. Although the outbreak originated in rural Guinea, it has hit hardest in Liberia and Sierra Leone, in part because it has reached urban areas in these two countries, a factor that distinguishes this outbreak from previous episodes elsewhere. As of October 3, 2014, there had been 3,431 recorded deaths out of 7,470 probable, suspected, or confirmed cases of Ebola. This report informs the response to the epidemic by presenting best-effort estimates of its macroeconomic and fiscal effects. Any such exercise is necessarily highly imprecise due to limited data and many uncertain factors, but it is still necessary in order to plan the economic assistance that must accompany the immediate humanitarian response. The goal is to help affected countries to recover and return to the robust economic growth they had experienced until the onset of this crisis. This document presents the World Bank's preliminary estimates of the economic impact of the Ebola outbreak in West Africa for 2014 (short term impact) and 2015 (medium term impact). Section 2 presents a single set of 2014 estimates for Liberia, Sierra Leone, and Guinea, based on available data on current economic activity as well as assumptions about the short-term impact. It also presents current data on the limited current impacts on other countries in the region. Section 3 presents estimates for the impact by the end of 2015 for Liberia, Guinea, and Sierra Leone, as well as estimates for West Africa as a whole. Because the epidemic and the behavioral responses to it have more time to diverge over the course of 2015, Section 3 presents two scenarios for 2015, which vary in the optimism of their assumptions regarding the epidemic and the success of donor and government policy and efforts to control it. The take-away messages from this analysis are a low Ebola scenario that corresponds to rapid containment within the three most severely affected countries, and a high Ebola scenario corresponds to slower containment in the three countries, with some broader regional contagion. A swift policy reaction by the international community is crucial. With potential the economic costs of the Ebola epidemic being so high, very substantial containment and mitigation expenditures would be cost-effective, if they successfully avert the worst epidemiological outcomes. To mitigate the medium term economic impact of the outbreak, current efforts by many partners to strengthen the health systems and fill the fiscal gaps in the core three countries are key priorities. Finally, this report does not take into account the longer term impacts generated by mortality, failure to treat other health conditions due to aversion behavior and lack of supply capacity, school closings and dropouts, and other shocks to livelihoods. It is truly focused on the short and medium-term inputs, over the next 18 months.Publication The Economic Impact of the 2014 Ebola Epidemic : Short and Medium Term Estimates for Guinea, Liberia, and Sierra Leone(Washington, DC, 2014-09-17)The 2014 outbreak of the Ebola Virus Disease in West Africa has taken a horrible human toll. Although the outbreak originated in rural Guinea, it has hit hardest in Liberia and Sierra Leone, in part because it has reached urban areas in these two countries, a factor that distinguishes this outbreak from previous episodes elsewhere. As of September 10, 2014, there had been 2,281 recorded deaths out of 4,614 suspected or confirmed cases of Ebola. Experts fear that the true numbers may be two to four times larger, due to underreporting. Misery and suffering have been intense, especially in Liberia where doctors have had to turning patients away for lack of space in Ebola treatment centers. Inevitably, before the outbreak is contained the human impacts will increase considerably over these numbers. Epidemiological estimates are acknowledged as highly uncertain and are not the subject of this note. What is certain is that limiting the human cost will require significant financial resources and a concerted partnership between international partners and the affected countries. Particularly in Liberia and Sierra Leone, government capacity is already overrun and the epidemic is impacting macroeconomic activity and budgetary resources. This note informs the response to the epidemic by estimating these macroeconomic and fiscal effects. Any such exercise is necessarily highly imprecise due to limited data and many uncertain factors, but it is still necessary in order to plan the economic assistance that must accompany the immediate humanitarian response. The goal is to help affected countries to recover and return to the robust economic growth they had experienced until the offset of this crisis.Publication Update on the Economic Impact of the 2014 Ebola Epidemic on Liberia, Sierra Leone, and Guinea(Washington, DC, 2014-12-02)The Ebola epidemic continues to cripple the economies of Liberia, Sierra Leone, and Guinea. The crisis is resulting in flat or negative income growth and creating large fiscal needs in all three countries, as they work to eradicate the virus. This update presents the World Bank s most recent analysis of the economic effects of the Ebola epidemic on the three countries. All three had been growing rapidly in recent years, and into the first half of 2014. But GDP growth estimates for 2014 have been revised sharply downward since pre-crisis estimates. Projected 2014 growth in Liberia is now 2.2 percent (versus 5.9 percent before the crisis and 2.5 percent in October). Projected 2014 growth in Sierra Leone is now 4.0 percent (versus 11.3 percent before the crisis and 8.0 percent in October). Projected 2014 growth in Guinea is now 0.5 percent (versus 4.5 percent before the crisis and 2.4 percent in October). The World Bank s October report on the economic impact of Ebola (report no. 91219 released at the 2014 Annual Meetings of the IMF and the World Bank) found that if the epidemic continues in the three worst-affected countries and spreads to neighboring countries, the two-year regional financial impact could range from a "low Ebola" estimate of $3.8 billion to a "high Ebola" estimate of $32.6 billion. These scale estimates of potential impact remain valid: the epidemic is not yet under control. Containment, combined with a full-fledged financial recovery effort to restart business activity and bring back investors, are now both therefore urgently needed for the region to improve on the downbeat forecasts in this update.Publication The Economic Impact of Ebola on Sub-Saharan Africa : Updated Estimates for 2015(Washington, DC, 2015-01-20)The most severe impact of the Ebola epidemic, which began in Guinea in December 2013 and quickly spread to Liberia and Sierra Leone, has been in lost human lives and suffering. This report, prepared for the World Economic Forum at Davos, focuses on the indirect, economic costs, in particular the effects on economic output in 2015. Most of the economic cost is driven by aversion behavior, which consists of both the actions taken by individuals to avoid exposure to the illness and actions taken by investors in anticipation of those individual choices. The report first estimates the impact of the epidemic on gross domestic product (GDP) in Guinea, Liberia, and Sierra Leone. Here the report builds on sector-specific analysis to update World Bank forecasts for the three countries, and incorporates recent results of World Bank-financed cellphone surveys in Liberia and Sierra Leone. The authors evaluate the economic effects of the epidemic on the continent, beyond the three hardest-hit countries, using assessments by World Bank country economists across the 48 countries of sub-Saharan Africa. Finally, the report updates estimates from the global economic model of the research arm of the World Bank, to quantify the 2015 impact of the potential spread of the epidemic to other countries. Updated general equilibrium analysis suggests that further spread of the epidemic to other African economies, if the epidemic is not contained and instances of infection continue to occur in other countries, can potentially exact an economic toll of the order of 6 billion dollars. The results underscore the importance of: (a) Ebola and broader pandemic preparedness in African countries; and (b) reaching the goal of zero new cases as soon as possible in the three most affected countries.Publication Update on the Economic Impact of the 2014-2015 Ebola Epidemic on Liberia, Sierra Leone, and Guinea(World Bank, Washington, DC, 2014-04-15)A year after the onset of Ebola, the estimated GDP losses for the three countries through 2015 total US$2.2 billion (US$240 million for Liberia, US$535 million for Guinea and US$1.4 billion for Sierra Leone). This is the result of the severe impact of the epidemic which has been exacerbated by the large decline in the world price of iron ore and severe corporate governance issues in mining in Sierra Leone. Important differences among the three countries are emerging. Liberia is gradually returning to normalcy, Guineas economy is stagnating, and Sierra Leone is suffering a severe recession. This update presents the World Banks most recent analysis of the economic and fiscal effects of the Ebola epidemic on the three countries. In relation to our January 2015 report it contains: 1) an updated status for the economies of Liberia, Guinea, and Sierra Leone; and 2) a brief description of these countries Economic Recovery Plans with indicative estimates of their potential impact on growth. As of April 2015, the Ebola epidemic has been largely contained but the negative effects on the economies of Liberia, Guinea and Sierra Leone loom large amidst continued uncertainty about the timing of complete eradication. The crisis continues to adversely affect these economies, so pace of recovery in these countries will depend heavily on adequate financing and effective implementation of the recovery plans. Ultimately, Liberia, Guinea and Sierra Leone will need the strong support from the development community over the next years to both make up for the losses incurred during the Ebola crisis and make these economies less vulnerable for the future.
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