Thursday, December 30, 2004

Asia to see limited impact on economies of tsunami disaster

Credit Suisse First Boston (CSFB) said Sunday's
earthquake and tsunami disaster around the Indian Ocean
is unlikely to have a significant negative impact on
Southeast Asian countries' economies in 2005. 'The
impact, on average, on GDP growth in 2005 is likely to
range in the 0-0.75 pct point range, which in our view
is unlikely to reduce the attraction of Southeast Asia
and India as an investment destination,' CSFB said in a
note. CSFB said that Thailand is likely to to be the
most severely affected, followed by Indonesia, India,
and Malaysia.

One reason for the limited impact of the disaster is
that the manufacturing sector is likely to be unscathed,
'while key service sectors such as banking, utilities,
and business services are likely to remain resilient',
CSFB said. Additionally, construction activity will
'receive a boost from re-building activities in the
infrastructure and tourism sectors', CSFB added.

The main sectors that will be hit in terms of output in
2005 are likely to be tourism, fisheries and
plantations, CSFB said. CSBF also warned that the
'large-scale destruction of property, availability of
clean water supply and medical attention for the victims
may spread to an epidemic-like scenario over the next
six to twelve months. This may have a more systemic
effect in terms of tourism flows to Asia and pose
downside risks to our assessment on GDP growth,' CSFB
said. For Thailand, CSFB said that the affected
provinces account for around 2.5 pct of the country's
GDP. 'Assuming that tourism to these provinces drops by
50 pct over the next 12 months, we anticipate the impact
on overall GDP growth to be in the region of 0.5 pct
points,' CSFB said.

For Indonesia, CSFB said that the direct impact on the
country's GDP growth from the disaster is likely to
shave less than 0.2 pct points off its forecast of 5.1
pct year-on-year growth for 2005. Among the countries
hit by the disaster, CSFB said that Malaysia is likely
to be the least impacted, and it is maintaining its GDP
growth forecast of 5.5 pct year-on-year.

Latest News: NY Times:

"Jan Egeland, the United Nations' emergency relief
coordinator, said Wednesday that the death toll from the
tsunamis had risen above 80,000, though that number
could still rise.

While the disaster affected countries from Malaysia to
Somalia, the greatest devastation appears to have
occurred in the Indonesian province of Aceh, where more
than 45,000 deaths have been reported. But large parts
of the province remain virtually cut off."

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