Is Ebola a threat to the economy?
It’s certainly a threat to Africa’s economy. The West Africa epidemic has resulted in almost 10,000 cases and over 3500 deaths. Two cases have been reported outside of Africa: one in Texas and one in Spain. Exxon Mobil and other mining operators have suspended many of their West African operations. In Liberia, Guinea, and Sierra Leone it has overwhelmed the health care system. And of course any tourism has ceased.
Measures taken to control the disease, like quarantines and travel restrictions, naturally impact local trade and economic activity as well. If they result in food shortages and price spikes, they could make matters worse, as infected individuals move across porous borders to new areas.
But it’s unlikely to become widespread in more developed economies. The disease thrives in conditions of rural poverty. Hand-washing is especially important, and people don’t think to wash their hands when they don’t have enough drinking water.
At this point the disease is still growing exponentially:
But the growth has been largely confined to West Africa. Even Nigeria has been able to limit its spread. So far, the pathogen has had a limited effect on global stocks. But if the virus moves to other regions, the markets could experience their own contagion.
Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!