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While the overall economic impact of the tsunami is likely to be minimal, the effects on those with low incomes is likely to be "enormous" due to loss of livelihoods, predicts the Asian Development Bank
Nearly 2 million people in Asia risk falling into poverty as a result of the tsunami that killed more than 162,000 people and affected around 5 million more along the Indian Ocean, says the Asian Development Bank (ADB). "Poverty is potentially the most important effect of this natural disaster," the Bank said on January 13.
While the overall effect of the disaster on most economies will be minimal -- as cities and factories escaped damage -- and, in some cases, even beneficial, the Manila-based institution said its initial overview showed that the weakest in society would bear the economic brunt of the disaster.
"The poverty impact of the tsunami will be enormous," ADB chief economist Ifzal Ali said in a statement. Already, there are 1.9 billion people in Asia living on less than $ 2 a day.
The report states that 1 million people could fall below the poverty line in Indonesia alone, most of them living in the northern province of Aceh where over 100,000 people perished. The number of poor in India could rise by 645,000, and in Sri Lanka by 250,000, the report adds. In the Maldives, where 43% of the population already lives on less than $ 2 a day, this could rise to 50%, with 23,500 more residents facing poverty after the tsunami. About half the island nation's houses suffered some form of damage.
The economies of Sri Lanka and the Maldives are likely to be the worst affected by the tsunami, but other countries should be able to absorb the impact and even get a boost from reconstruction in rural areas that were hit hardest by the giant waves. "Reconstruction from natural disasters requires new investment that should have a positive impact. And investment should translate into jobs," the report says. "Therefore, it is possible that the overall economic impact could well end up being somewhat positive," the study notes.
Sri Lanka's government has estimated reconstruction costs at nearly $ 3 billion. A government task force held meetings to discuss an emergency rebuilding plan with the ADB, World Bank and Japanese aid agencies, which it promised to publish within 10 days.
Private economists have also said that the impact of the tsunami on bigger economies such as Thailand and Indonesia would be minimal and probably less than the damage from SARS (Severe Acute Respiratory Syndrome), bird flu and terrorism. Although Indonesia's northern province of Aceh had the highest death toll, the region's oil and natural gas production facilities "have survived intact" the report says.
However, the Bank said it is still too early to assess the damage to poor people's livelihoods in Aceh because that would depend on how much farmland had been flooded by seawater, destroying standing crops and rendering the land uncultivable for some time because of high soil salinity.
Donor nations have promised $ 717 million ( 379 million) in disaster relief over the next six months, according to the United Nations. Ali warned that aid pledges must be promptly delivered, saying the number of people at risk of poverty hinged on concerns over sanitation and health conditions, and other basic needs being properly and quickly addressed.
Source: Reuters, January 13, 2005
www.bbcnews.com, January 13, 2005
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