World Bank, IMF Urge Sub-Saharan Africa to Focus on Ebola Risk

By Rene Vollgraaff  Oct 7, 2014 9:00 AM ET

Sub-Saharan African economies need to better prepare for the risks of the Ebola outbreak, wider budget shortfalls and security threats from militant groups, according to the World Bank and International Monetary Fund.

“Risks that require enhanced preparedness include rising fiscal deficits in a number of countries, economic fallouts from the activities of terrorist groups such as Boko Haram and al-Shabaab and, most urgently, the onslaught of the Ebola epidemic in West Africa,” World Bank Chief Economist for Africa Francisco Ferreira said today in an e-mailed statement.

The Ebola outbreak will cut economic growth in the worst-affected nations of Guinea, Sierra Leone and Liberia by 2.1 percentage points to 3.4 percentage points, the World Bank said. The virus haskilled more than 3,400 people in those three countries since March, out of 7,470 recorded cases.

“Without a scale up of effective interventions, the virus could spread more rapidly than assumed,” the Washington-based lender said today in its Africa’s Pulse report. “In addition to the loss of lives, affected countries would suffer a sharper decline in output, with growth slowing markedly not only in the core countries, but also in the sub-region.”

The World Bank lowered its forecast for economic growth in sub-Saharan Africa to 4.6 percent this year compared with 5.2 percent in April. The IMF cut its 2014 economic outlook for the region to 5.1 percent from an earlier estimate of 5.4 percent.

“The security situation in several parts of sub-Saharan Africa remains fragile, including in the Central African Republic and South Sudan,” the IMF said in its World Economic Outlook released today. “The fiscal position is weakening in a few countries on the back of rising current expenditures.”

Nigeria, the largest economy in Africa that’s battling an insurgency by Boko Haram militants, will expand 7 percent this year, compared with a forecast of 7.1 percent in April, the IMF said. Africa’s second-biggest economy, South Africa, is projected to expand 1.4 percent, down from an earlier forecast of 1.7 percent, according to the lender.

“Growth in South Africa has remained lackluster, dragged down by protracted strikes, low business confidence and tight electricity supply,” the IMF said.