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12 January 2005
By FT
Sri Lanka and the Maldives will be the two
economies worst affected by the Indian Ocean
tsunamis, although Indonesia suffered many
more casualties, according to a preliminary
assessment by the Asian Development Bank.
The ADB report, to be published on Thursday,
says the overall macroeconomic impact of
the disaster is likely to be "limited
and marginal" despite a death toll
that exceeds 150,000, mostly in the Indonesian
province of Aceh in northern Sumatra.
Sri Lanka and the Maldives will be adversely
affected because of their small geographical
size, fiscal deficits and dependence on hard-hit
industries such as tourism and fisheries.
In Sri Lanka, the tsunami ripped up railways
and roads and is estimated to have destroyed
100,000 homes and 150,000 vehicles.
Indonesia's economy is expected to emerge
largely unscathed because neither the oil
and gas sector nor any other heavy industry
was seriously affected. Aceh accounts for
about 2 per cent of Indonesia's gross domestic
product and population.
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A speedboat on the pavement |
India and Thailand could even post higher
economic growth than previously forecast
because of the multiplier effects of reconstruction,
the ADB said.
"It might be a heartless thing to say
but that's how economies work," said
Ifzal Ali, ADB chief economist.
However, the report warned the same factors
that will protect the region's macroeconomic
figures this year - mainly the preponderance
of rural people among the victims - could
lead to a sharp rise in poverty, especially
in southern India, Sri Lanka and Indonesia. "Poverty
is potentially the most important effect
of this natural disaster," it said.
India has asked the World Bank and the Asian
Development Bank for help with long-term
reconstruction and rehabilitation of its
tsunami-damaged mainland.
India's government estimates the tsunami
claimed more than 10,000 lives and destroyed
property worth $1.5bn (€1.1bn, £800m).
Yet New Delhi surprised foreign governments
when it rebuffed offers of outside help with
relief operations.
India argued it was able to cope with immediate
disaster relief, a stance that appears justified
since no more lives have been lost and government
co-ordination appears efficient in tsunami-ravaged
parts of south India. Lalit Mansingh, a former
Indian foreign secretary and key architect
of India's aid policy, said: "What we
need is more investment, not charity."
Aid groups say India needs long-term help
to restore farming and fishing, clean water
sources and rebuild schools.
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