IMF cuts Africa growth forecast over Ebola Virus

The International Monetary Fund (IMF) has reduced its growth forecast for sub-Saharan Africa because of the outbreak of the Ebola virus in West Africa and violence in at least five other countries.

Africa’s economy will expand 5 per cent this year, about the same as in 2013, driven by infrastructure investment, a buoyant services sector and strong agriculture production, the IMF said today in an e-mailed statement. In April, the Washington-based fund forecast a 5.5 per cent growth rate this year.

Low-income countries will spur expansion with growth of as much as 7 per cent in 2014-2015, Antoinette Sayeh, director of the IMF’s Africa Department, said in a statement. Ebola has killed more than 4,500 people in Guinea, Liberia and Sierra Leone since the outbreak of the virus in December.

“The Ebola outbreak could have much larger regional spillovers, especially if it is more protracted or spreads to other countries, with trade, tourism, and investment confidence severely affected,” according to the IMF. “In Ebola-affected countries, fiscal accounts are likely to deteriorate, and, where public debt is manageable, fiscal deficits should be allowed to widen temporarily.”

Worsening insecurity stemming from civil wars and Islamist militant attacks could also curb Africa’s economic growth, according to the IMF.

“The security situation continues to be difficult in Central African Republic and South Sudan, and remains precarious in northern Mali, northern Nigeria, and the Coast of Kenya,” it said. Domestic economic challenges may also curb growth in countries such as South Africa that are facing electricity shortages and labour disputes, according to Fund.

In Ghana and Zambia, “large macroeconomic imbalances have led to pressures on the exchange rate and inflation,” it said.

Ebola-free

Senegal became the first country to be declared free of Ebola during the worst-ever outbreak of the virus after no new cases were reported in at least 42 days, the World Health Organisation (WHO) said October 17. Nigeria, which recorded 19 cases and seven deaths, will probably be declared Ebola-free today (yesterday), according to the WHO.

True to expectation, the World Health Organisation declared Nigeria officially free of Ebola after six weeks with no new cases yesterday. WHO representative Rui Gama Vaz, speaking in the capital Abuja, said it was a “spectacular success story”. Nigeria won praise for its swift response after a Liberian diplomat brought the disease there in July.

The outbreak has killed more than 4,500 people in West Africa, mostly in Liberia, Guinea, and Sierra Leone. An estimated 70 per cent of those infected have died in those countries.

Meanwhile, far from the heart of West Africa’s Ebola outbreak, the safari industry is taking a hit as alarm over the deadly virus causes travellers to shun the entire continent.

Tour operators in the eastern and southern nations famed for wildlife are part of widening fallout from the disease. Instead of just skirting the danger zone in Liberia, Guinea and Sierra Leone, some visitors are abandoning a sub-Saharan tourism market the World Bank estimates at $36 billion. “It’s a shame,” said Oyin Anubi, a Bank of America Corp. economist in London. “There haven’t been any cases of Ebola in East Africa, but I think it’s more an issue of perception rather than reality on the ground.”

Reservations for future trips are down and cancellations of existing vacations are up at least 10 per cent at more than half of 500 safari companies in a survey last month, according to online marketplace SafariBookings.com. In Kenya, foreign anxiety over Ebola in a country where the virus is absent only adds to the drag on tourism after a 2013 terrorist attack in Nairobi.

One brush

“A lot of worries about Africa-risk in general are about political risk, which is very specific to each country,” Anubi said by telephone. “With Ebola, people may just be painting the whole continent with one brush, where it is a relatively isolated outbreak for now.” Separately, European Union foreign ministers are meeting in Luxembourg to discuss how to strengthen their response to the threat posed by Ebola.

European countries have committed more than $600m million  but the UK is pressing to double that amount.