Ebola Devastates West Africa: Revenues Down; Markets Not Functioning; Projects Canceled; GDP Plunges 4%
In all of its infinite wisdom, the "market", which stopped reacting to newsflow or discounting the future some time after the Fed officially announced it would centrally-plan it indefinitely, decided that just like the trade war against Russia is irrelevant only to find itself a week ago with Europe staring at the abyss of a triple-dip recession, so it decided that the worst Ebola outbreak in history is a non-event, even though it has put virtually all of western Africa on indefinite lockdown, and as Reuters reports, is "causing enormous damage to West African economies and draining budgetary resources." In fact the damage from Ebola to Africa is already so acute, it is expected that economic growth in the region will plunge by up to 4 percent as foreign businessmen leave and projects are canceled, according to the African Development Bank president said.
"Revenues are down, foreign exchange levels are down, markets are not functioning, airlines are not coming in, projects are being canceled, business people have left - that is very, very damaging," African Development Bank (AfDB) chief Donald Kaberuka said in an interview late on Tuesday.
"The numbers I have had vary from one percent to four percent of GDP. That is a lot in a country with a GDP of US$6 billion," Kaberuka said, when asked to quantify the impact.
That's ok, surely the Central Bank of Nigeria will just print some "growth" to offset the 4% GDP plunge. Oh wait, wrong continent for such moronic drivel. Here businesses actually have to, well, "business" in order to generate cash flow and to grow, and where printing prosperity and wealth out of thin air is still a novel concept.
And while all the world's central banks can push the CTRL-P button and mask the simple fact that global trade is crumbling around the world, which despite the happy all time high stock market facade, is getting dragged down ever deeper into currency and trade wars...
... sooner or later the reality that globalization is rapidly unwinding will finally come to the surface. And while the sudden stop of the German economy in the aftermath of the Russian sanctions may not be the stick the breaks the camel's back, said stick may be, appropriately enough, in the continent much more preferred by camels.
Here is what else is going on:
As transport companies suspend services, cutting off the region, governments and economists have warned that the worst outbreak of the hemorrhagic Ebola fever on record could crush the fragile economic gains made in Sierra Leone and Liberia following a decade of civil war in the 1990s.
Air France, the French network of Air France-KLM said on Wednesday it has suspended its flights to Sierra Leone following advice from the French government. France did not recommend suspending flights to Nigeria and Guinea.
Liberia has already said that it would have to lower its 2014 growth forecast, without giving a new one.
Sierra Leone Deputy Minister of Mineral Resources Abdul Ignosis Koroma also told Reuters that the government would miss its target of exporting $200 million in diamonds this year because of the Ebola outbreak, versus $186 million last year.
"There is no way the government can reach this amount since the districts where diamonds are mined are not Ebola-free, especially the main diamondiferous region Kono," Koroma said. Miners, he added, are too afraid to go to alluvial diamonds pits in the country's Ebola-striken east.
But while nobody cares about the cataclysm the locals find themselves in because clearly, they are "out of sight", one firm that will be furious is De Beers: "Diamond trade had also been stopped by tough border controls to curb the spread of the virus." Which means the world's billionaires will have to spend more on bling, and we can't have that.
Actually we jest: nobody cares about Africa - it is on its own.
The AfDB this week donated $60 million toward essential supplies to help train medical workers and purchase supplies to fight the outbreak, which has already killed more than 1,400 people, mostly in Guinea, Sierra Leone and Liberia.
Sadly Africa needs hundreds of millions more, money which it doesn't have... money which represents several minutes of the Fed's daily market manipulating POMO liquidity injection.
And since it won't get it, the epidemic could soon lead to an all out economic depression in west Africa: "Kaberuka described the health care systems of the affected countries as "overloaded". He said he hoped the donation would stop money being diverted away from other programs such as the education and agriculture, thereby reducing the long-term damage from the outbreak."
"We need to begin now to plan what could happen next when Ebola is beaten," he said.
Sure, but let's get there first, and also let's hope that the epidemic, which shows zero signs of abating, doesn't lead to another slashing of GDP other places: places which the general ice-bucket challenge-obsessed public actually does care about. Because printing antibodies is not one of the Fed's "shotgun approach" specialties.
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