Asian disaster to cause limited impact

Asian disaster to cause limited impact

Agence France-Presse, Sydney

The cost in human life of the Boxing Day tsunamis is appalling by
any measure but the economic impact of one of the world's worst
natural disasters is likely to be minimal in the longer term,
Australian analysts said on Tuesday.

The earthquake and giant waves that shattered coastal regions
in 11 countries, killing 150,000 people and leaving millions
homeless, has caused little major damage to the economic
infrastructure of most of the affected countries.

Even in Thailand and Sri Lanka destruction of the tourism
industries is likely to be offset in part by a reconstruction
boom while financial markets in the region and beyond have been
hardly affected after an initial dip.

BT Financial Group senior economist Tracey McNaughton said
supply disruption may fuel inflation problem in the affected
countries.

However, while the economic costs of the disaster would be
substantial relative to the income of those countries affected,
the overall impact would be slim, she said in a note.

"The tsunami hit relatively undeveloped areas and no major
industrial or infrastructure facilities were affected," she said.

The impact even on insurance companies was likely to be
limited as most of the damaged areas would not be covered by
insurance.

BT said the Insurance Information Institute had estimated
insured losses at anywhere from several hundred million to a few
billion dollars, which compared to insured losses of some
US$20 billion following the four recent hurricanes in Florida.

"Reconstruction efforts may be a boon for construction and
infrastructure companies," McNaughton said.

AMP Capital Investors chief economist Shane Oliver said
reconstruction efforts were likely to offset damage to the
tourism industry even in the countries worst affected, such as
Thailand and Sri Lanka.

"It's a total disaster for those involved but it's unlikely to
have a major impact for the Asian region at all, or have a
negative flow-on effect to Australia," AMP Capital Investors
chief economist Shane Oliver said.

"There may be the benefit of construction work which may be
required but I can't see a major impact on exports overall."

He said Asian stock markets had been little changed since the
crisis occurred, suggesting there was unlikely to be any major
impact on the region.

"Most of these economies will experience a negative initial
impact, say, in the March quarter," Oliver said.

"So in the first three months you might see a dip or a
slowdown in gross domestic product growth because you're seeing
the initial blow and then as the construction kicks in this will
be largely offset."

JP Morgan economist Stephen Walters said the tsunami could be
viewed as a positive for Australia in terms of exports and the
boost to local tourism it would provide.

Some Australians were now canceling their booked holidays to
Asia and were taking them locally instead, he said.

"It's substantial for certain countries like Sri Lanka,
Thailand and the Maldives because of the tourism impact, but
economies like Indonesia are not tourism areas.

"Once the reconstruction kicks in, this will actually be a
boost to growth."