Video #24 - Tsunami Economic Impact
Monday, January 16, 2006BACKGROUND INFORMATION
Experts agree that Indonesia was the hardest hit of the Asian nations impacted by the Tsunami. However, despite the devastating loss of life and physical damage to the Aceh area, this region is not crucial to the nation's economy. The official forecast on the growth of Indonesia's gross domestic product (GNP) is still a robust favorable 5.5% for 2005 (compared to 5.1% in 2004). The cost of reconstruction has been estimated at $4 billion over the next 5 years.
The International Labor Organization has estimated that Indonesia and Sri Lanka may have lost about 1 million jobs, with Sri Lanka losing one-fifth of the hotels on its south coast. The Asian Development Bank has set the cost of reconstruction there at $1.5 billion. Nonetheless, as of March of 2005, the Sri Lankan rupee has been the strongest performing currency in the world. Foreign aid seems to be offsetting the economic losses. (Note: see NBR/Asia Video #25 for more about Sri Lanka).
Damage to India's southeast coast has been estimated at $1.2 billion. That will slightly slow India's overall economic growth, because the government has assumed reconstruction without outside aid. The Indian islands of Andaman and Nicobar have reported damage to 70% of their jetties, affecting the fishing industry which employs two thirds of the local population.
Thailand's economy is still expected to register strong growth of 5.5-6.5% in 2005. Since the tourist area damaged by the Tsunami, Phuket, produces only 1.9% of the national income, the long-term effects are not as bad as had been feared. To help pay for the reconstruction effort, the Thai government is proposing special tax breaks in international markets for Thai products.
The Maldives is in dire straights. This was the only nation where the Tsunami affected the entire country, rather than a specific region. Tourism employed two-fifths of the workforce, which comprised 74% of the GDP. Hotel occupancy is reported at 45% of what it was at this time last year. Forty six of the eighty seven resorts there have reportedly suffered damage. More than half of the nation's people are now said to be earning less than $2 a day. The Asian Development Bank estimates reconstruction costs at $304 million, and total losses are estimated at over a billion US dollars, almost twice the country's GDP.
Conversely, Malaysia's damage has been estimated at $25 million. Its government has been providing aid to neighboring nations, notably, Indonesia.
Overall, the Tsunami has resulted in more of a humanitarian crisis than an economic one. The death toll is over 150,000 lives and the human suffering is immeasurable. However, Munich Re, the world's largest insurance company, has estimated the impact of the Tsunami at 10 billion euros, about US$17 billion. That ranks far behind the Kobe earthquake at US$173 billion and Hurricane Andrew at $39.5 billion. Tracey McNaughton of BT Financial Group sums it up well: "The tsunami hit relatively undeveloped areas and no major industrial or infrastructure facilities were affected."
SOURCES
"Asia can absorb tsunami effect: Report." rediff.com, January, 13, 2005. http://www.rediff.com///money/2005/jan/13tsunami.html
"At-a-glance: Tsunami economic impact." BBC News, March 22, 2005. http://news.bbc.co.uk/go/pr/fr/-/1/business/4154277.stm
"Maldives: Tsumani Economic loss will be billions." Scoop Independent News, January 3, 2005. http://sciio.co.nz/stories/wo0501/s00022.htm
Harcourt, Tim, Chief Economist, "Shock of the new - the economic impact of the Tsunami." Australian Government, Australian Trade Commission.
LESSON PLAN
GRADE LEVEL/SUBJECT:
10-12 grade Economics, International Relations, World History, Geography, International Baccalaureate Programs (IB), Current Events.
PURPOSE:
To present activities to be used in a variety of classroom situations in order to enhance student understanding of the Asian economy and its significance globally.
OBJECTIVES:
Students will be able to:
- Describe the effects of the Asian Tsunami on the affected nations.
- Evaluate the extent of the physical and economic damage to the areas involved.
- Analyze the long term impact of the natural disasters on the economy of the region.
MATERIALS:
- Background information provided.
- Resources on Asian Tsunami available at your school's Media Center and the Public Library System in your area.
- Background information available through Internet "search engines."
ACTIVITIES:
May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.
- Use a map of Asia to illustrate the area of each country in Asia which was affected by the Tsunami.
- Create a bulletin board display with the above map and descriptions of the impact of the Tsunami on each of the areas depicted on the map.
- Assign specific nations to cooperative learning groups and have them research and report on the short term and long term effects of the disaster.
EVALUATION:
Individual assignments should be graded by the teacher using established criteria.
Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale: Content 1 = Superior (A) Creativity 2 = Excellent (B) Clarity 3 = Good (C) 4 = Fair (D) 5 = Poor (F)
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