What was the economic impact?
The economic impact in many places still does not remains as clear. Some economies are better off, with little change, while other’s high cost of reconstruction could bring rewards of aid and investment.
Fast Points
- Ports destroyed.
- Fishing industry devastated – boats, nets and equipment was destroyed with about 60% of Sri Lanka’s fishing fleet destroyed.
- Communications damaged (roads, bridges and rail networks).
INDONESIA
Indonesia has been left the worst off in terms of deaths and physical damages compared to other places. However, Indonesia is not as badly affected when it comes to the economic disruption. Banda Aceh is the most affected region, still having plenty of resources, but is far from crucial to overall output.
As a result, official information on the growth in gross domestic product (GDP) remains the same, at a normal 5.5% for 2005. Despite the disaster, Indonesia’s shares have kept their strong performance with a series of record highs since the tsunami.
Even so, the immediate construction cost is high. According to an estimate done by the government, Banda Aceh will need over $4bn over the next 5 years. And an estimated 1 million jobs have been lost in Indonesia and Sri Lanka according to an estimation done by the International Labour Organisation.
Sri Lanka
Economy was significantly high before the tsunami due to the peace process after a 20 year civil war. Now, however, the central bank expects that growth in 2004 could be matched or exceeded in 2005.
Sri Lanka will need to pay a large reconstruction cost because their now destroyed infrastructure in the affected areas used to be more developed. There is a $1.5bn cost for rebuilding Sri Lanka that has been estimated by the Asian Development Bank. Their tourism industry has also been badly affected with most buildings being badly hit. Around 1/5 of the hotels in that area have been shut down.
Their rupee (currency) has recently been the highest currency in the world, increased by 5% from so much foreign aid. The central bank has estimated aid will more than balance any economic losses from the earthquake and tsunami.
India’s South-East Coast
Their economy has been barely hit by the tsunami, but the government have decided to do the full reconstruction by themselves, instead of relying on the aid available. This makes the budget costs on nearby countries more direct. $1.2bn in damages has been estimated on the Indian mainland. However it could cost over $6.5bn from calculations from Citigroup, because of a reduction of 0.4% of GDP (gross domestic product ) over up to four years. Other banks also have figures which are much less depressing.
The Indian economy is in a powerful spot to endure these losses. There has recently even been a growth as great as 8%; this year's forecast, 6-6.5%, has dropped due to poorer agricultural conditions, and hasn’t yet been officially revised downward from the time of the tsunami.
Thailand
Even though Thailand has a large tourist industry, researchers have not found evidence to alter the countries growth or losses. Even in the worst case, the cost percentage does not raise it by more than ½ a percentage point of GDP (gross domestic product) growth.
Thailand is better off than some nearby tourist destinations: although the industry accounting for between 5% and 12% of GDP, the affected area around Phuket produces just 1.9% of national income.
Thailand has been left better off than neighbouring tourist destinations, despite their tourism industry accounting for 5% and 12% of GDP (gross domestic product).
Their government have decided to maintain their credit rating rather than showing interest in reliving their debt. The Thai government have suggested unique tax breaks in Thai products sold in internationally.
Maldives
The Maldives are extremely dependent on the tourism industry with nearly 2/5 of the workers employed in it. In 2005, hotels (usually full) were around 45% full, and locals using the hotels say bookings are being cancelled.
Their damages are much less severe than affected, however the Asian Development Bank says reconstruction will be more than $304m with the government looking for $1.3bn from 2005- 2008. The ADB, estimate the fraction of people living on less than $2 a day will increase from 43% to more than half.