Ebola hits economy in Liberia, Sierra Leone, Guinea

The countries’ economies are expected to deflate by over 20-30 percent, it also said.The agriculture sector which employs over two-thirds of the countries’ rural populations, was hit significantly, with agricultural growth in all three revised downwards this year. (In Guinea from 5.7 to 3.3; Liberia from 3.5 to1.3 percent and Sierra Leone from 4.6 to […]

The countries’ economies are expected to deflate by over 20-30 percent, it also said.
The agriculture sector which employs over two-thirds of the countries’ rural populations, was hit significantly, with agricultural growth in all three revised downwards this year.
(In Guinea from 5.7 to 3.3; Liberia from 3.5 to1.3 percent and Sierra Leone from 4.6 to 2.6 percent) (World Bank 2014b).
Thus, in addition to economic activity contracting, increasing food prices threatened to compound the Ebola epidemic with a food security crisis.
Liberia, Sierra Leone and Guinea all depend on natural resources, including the mining sector, for revenue and jobs.
The Brookings Institution Africa Growth Initiative stated that “Africa’s growth has remained resilient despite the overall deceleration in global growth.”
Sub-Saharan Africa was projected to grow at 5.2 percent in 2014 and 5.7 percent in 2015 up from 4.9 in 2013.
At a time Africa was beginning to consolidate its growth, the fatality of the Ebola virus knocked the three most affected countries (Guinea, Liberia, and Sierra Leone) off course mainly due to its prohibitive impact on trade, economic activity in agriculture and mining services, and particularly the tourism sector, as well as spillover effects throughout the region, especially if the epidemic is not contained.
“Economic activities have ground to a halt in the countries as their populations try to protect themselves from the disease.  In 2012, total revenue from natural resources, including mineral exports accounted for 26.1 percent, 8.6 percent and 30.1 percent of GDP, respectively.
The Ebola virus has also disrupted their supply chains and, in many cases, forced the slow down or outright closure of mines. 
In Liberia, for example, Arcelor Mittal (MT), the largest mining company in the country, decided to postpone its planned investment to expand its production capacity from 5.2 million tons of iron ore to 15 million tons.
China Union, the second-largest mining company, shut down its operations in August.  As a result, the mining sector growth forecast by the World Bank for 2014 has been revised from 4.4 percent growth to a 1.3 percent contraction. In Sierra Leone, the country’s second-largest iron ore producer, London Mining, shut down.
The London-listed company was one of the country’s largest employers, with over 1,400 employees.  The mining sector in Guinea does not make up as much of the economy as in Liberia and Sierra Leone.
Thanks to the fact that Guinea’s major mines are far from the affected zones, the expected contraction is not projected to further deteriorate: the initial projection of mining sector growth was -3 percent and the revised projection of -3.4 percent is only slightly worse.
However, exploration work on the Simandou mine, with one of the largest iron ore deposits in the world, could slow considerably, impacting Guinea’s long-term growth prospects.