Ebola and the Liberian Economy2 Essay

Submitted By Cynnise-Johnson-Lyle
Words: 830
Pages: 4

Article Analysis for Week 3
Cynnise Johnson – Lyles
Economics for the Information Age
ECON/103
October 19, 2014
Professor Brian W. Sloboda

Due to the recent Ebola outbreaks, the Liberian economy has begun to quickly fall. The Liberian people’s fears are being realized, and there is little they can do. Liberia was hit hardest by the Ebola outbreak, and because of it the Liberian people are being forced to take drastic measures to survive. The Ebola outbreak in Liberia has arrived with devastating consequences. The Liberian people are not only dying from the disease, but the economy is suffering. People are abandoning their fields and jobs, the import and export of goods has been strictly restricted, and so has travel and transportation. The short and long-term goals for the economy are now in turmoil. There are predictions of reduction in growth and inflation as well as the Liberian government is struggling to provide basic social services to its people. As news of the Ebola virus continues to spread, the Liberian people are in a panic. They are abandoning their crops or jobs working the fields, because they fear that they will contract the disease from either the food, the fields or the water irrigated throughout the fields. Food is scarce in some areas, making it a temporarily nonrenewable resource. According to the World Bank Report, some of Liberia’s big agricultural exports like rubber, Liberia’s number one export, and palm oil, are being disrupted due to a lack of workforce and getting the products to port because of quarantine. (The World Bank, 2014) The construction of a new palm oil mill that was scheduled to be built by 2015 was put on hold, reducing Liberian capital. In August, China Union, a major mining company, closed its operation. It had a projected production of about 2.4 million tons of iron ore. (The World Bank, 2014) Short-term and long-term projection for Liberia’s economy are in a constant downfall. The private sector cycle is broken. Households aren’t going to work or buying goods, so the firms and businesses aren’t making any money or producing any goods or services. The World Bank has projected a reduction in growth in Liberia from 5.9 percent to 2.5 percent, and could decrease by nearly 12 percent in 2015. (The World Bank, 2014) Inflation is also predicted to rise, estimating a 13.1 percent by year’s end, compared with 7.7 percent in 2013. Liberian entrepreneurship and businesses are also failing. “Susu” or the savings and loans programs that are financing “micro-trade” and small businesses have been depleted, and the participants are no longer able to pay their debts. (FAO Regional Office for Africa, 2014) Fuel sales have dropped between 20 and 35 percent because transportation has almost ceased; the services sector, which makes up about half of the Liberian economy, employing 45 percent of the work force, has experienced a drop in turnover of 50 to 75 percent. (The World Bank, 2014) The most devastating economical effect of the Ebola outbreak is the effect it has on the revenues going into the Liberian government. The public sector incoming revenue has dropped by 20 percent. Liberian foreign minister, Augustine Kpehe Ngafuan, told the United Nations, “Consequently, our ability to provide for basic social services and continue to fund key development projects are significantly diminished.” (Barbash, 2014) The…