The Economics of Ebola

By AVI RUBIN

Amidst all the media attention and interest in the recent outbreak of Ebola in West Africa and its appearance in the United States, one of the important consequences of this deadly outbreak has been overlooked: the drastic economic effects for the countries distressed by this disease. Earlier this week, leaders from 20 different countries with large economies met in Australia discuss ways to prevent the spread of Ebola, as well as the worldwide humanitarian and economic effects of the spread of the disease. The issue clearly goes beyond the physical effects of contracting the disease.

At the meeting in Australia, the leaders discussed solutions to the economic distress experienced by the three countries hardest hit by Ebola: Liberia, Guinea, and Sierra Leone. All three countries face “a financing gap of between $100 million and $130 million due to the havoc hitting agriculture, trade, and other commerce,” according to the International Monetary Fund. Indeed, the outbreak of the disease has taken a toll on the economies of these countries, as international investors have declined to visit the countries, and multiple corporate events have been cancelled within all three countries. Countries such as the United States have been asked to give money to help with the recovery of these countries, as well as help to find ways to prevent the spread of the disease, because if the spread of Ebola continues, the effects could be devastating for more than just the three countries mentioned earlier.

In this day and age, the global economy is almost completely interconnected, and a devastation of the economies of just a few countries could have wide-reaching, long-term effects for many other counties in the world. Last month, the International Monetary Fund “cut its forecast for economic growth in sub-Saharan Africa this year to 5 percent from 5.5 percent” as a result of the Ebola outbreak. If the virus continues to spread in the region, the World Bank Group predicts that the “regional financial impact could reach $32.6 billion by the end of 2015,” and the economies of other nations who are trading partners with these countries would also be damaged.

The drastic effects an epidemic can have on the economy have been seen before in history. Although a much more drastic and widespread outbreak, the Black Plague in 14th century Europe caused “abrupt and extreme inflation” which caused other negative effects on the economy in the region. If the current spread of Ebola is not stopped, a similar situation might occur.

Last week, the World Bank made the following statement: “Economic costs can be limited if swift national and international responses succeed in containing the epidemic and mitigating fear resulting from people’s concerns about contagion, which is fueling the economic impact.” I think the best solution right now would be for countries not drastically effect by the outbreak to both give money to improve the economies of the countries hit the hardest, as well as to fund research and search for ways to prevent the spread of the virus. If this doesn’t happen, the worldwide economic situation could get exponentially worse.

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