Economic growth forecasts cut for Ebola-hit West African nations
The economic outlooks for Guinea and Liberia, two other mining-dependent West African countries also fighting Ebola, were lowered by Standard Chartered Bank.
The consequent price pressures could accelerate inflation into double digits by year-end
Sierra Leone, Guinea and Liberia are among the poorest countries in the region and the hardest-hit by the worst Ebola epidemic on record, which has killed nearly 2,300 people.
Sierra Leone Finance Minister Kaifala Marah told Reuters that a previous target of 11.5 percent economic growth this year was “unachievable in the face of the Ebola outbreak”.
“Revenue is dropping [because] many of the big businesses are folding up,” he said, estimating that the government had lost $60 million in revenue in the last three months as activity in the mining and tourism sectors dried up.
The end of Sierra Leone’s war just over a decade ago led to large scale investment from mining companies like African Minerals and London Mining, spurring rapid economic growth even if development lagged.
Peace and pristine beaches brought nearly 60,000 visitors last year through the country’s nascent tourist industry.
But in the face of the deadly disease, miners have reduced activity, airline flights have been suspended and the government’s weak health system is struggling to contain a disease that has killed 509 people so far in the country.
In a Sept. 8 report, Standard Chartered slashed its forecast for Sierra Leone’s economic growth this year to 7 percent from a forecast of 12 percent.
“Iron-ore production, which accounted for more than two-thirds of Sierra Leone’s 20 percent real GDP growth in 2013, is expected to take a significant hit in 2014,” Standard Chartered said.
Cases in this Ebola outbreak were first confirmed in Guinea in March. The disease has since spread to Liberia and Sierra Leone, and cases have also been reported in Nigeria and Senegal.
But the impact of the disease and restrictions imposed to fight it are being felt across the region.
Standard Chartered said Liberia’s economy was expected to grow at 4 percent, missing a 5.9 percent target, largely due to mining companies suspending operations and delaying investment.
It said Ebola would add to political uncertainty and power cuts in Guinea, where economic growth was likely to slip to 2.5 percent from a forecast 4.5 percent.
“As these countries are mining-dependent, growth revisions come on the back of expected production shortfalls,” Standard Chartered said.
“Disruptions to agricultural value chains are also considerations. The consequent price pressures could accelerate inflation into double digits by year-end,” Standard Chartered said.
The World Health Organisation has warned that Ebola may infect up to 20,000 people in West Africa.
The Bill & Melinda Gates Foundation said on Wednesday that it would spend $50 million to support emergency efforts to help contain the epidemic.