ECONOMIC EFFECTS OF THE 2004 TSUNAMI Research Paper

ECONOMIC EFFECTS OF THE 2004 TSUNAMI - Research Paper Example In that terrible event, it was realized that the corporate world is indeed made up of real citizens and that business is never emotionless. This arose out of the many supplies that actually came from the corporate world as small organizations and global multinationals were almost competing in their donations towards the affected people. In the analysis of the physical and economic impact of the tsunami, many issues begin to emerge. The effect of the tsunami was indeed much greater than initially presumed and some of those effects continue to be felt to this day. In the same vein, there are certainly many lessons to be learnt from the economic impact of the tsunami more than the mere short term effects on the affected countries. Physical facts The tsunami began with a seismic shift on the floor of the Indian Ocean on the 26th December 2004 off the island of Sumatra in Indonesia. The whole shift set off a giant tidal wave that destroyed and swept houses and other structures on the beac hes wherever if reached. On the Richter scale, the oceanic earthquake measured 9.0 which was certainly a strong force. In less than three weeks later, the number of people who had been confirmed dead from the effects of the tsunami had reached 165,000. More deaths were later realized from water borne diseases, malnutrition and other effects that arose later. In the end, the estimated death toll was over 300,000 (Allen 45). The countries that were physically affected by the tsunami were Indonesia, Sri Lanka, Thailand, India, Maldives, Kenya, Somalia, Tanzania, Myanmar, Seychelles and Bangladesh. Economic impacts of the Tsunami In the face of the tsunami, the immediate direct economic impact was the radical reduction in the consumption and business activity in the affected areas. Many people were greatly affected and they totally had to rely on food donations that mainly came from the corporate bodies. The economic effect of this phenomenon was, therefore, the reduced purchasing power which certainly affected organizations which mainly relied on the Asian markets. The most affected country was Indonesia which experienced a lot of costs in the reconstruction process given that the tsunami had greatly destroyed the costal infrastructure of that country. It was estimated that in the most affected area of Aceh, the government would need over $4 billion in the next five years in order to assist in the reconstruction process given that the area was totally flattened by the great waves. Figures from the International Labor Organization (ILO) reveal that more than 1 million jobs were lost as consequence of the tsunami in Indonesia (Askew 56). In Sri Lanka, the economy was enjoying a relatively high economic growth rate and peaceful times following the end of the 2 year civil unrest in the country. Just like Indonesia, the country was faced with a hefty reconstruction bill considering that its destroyed infrastructure was certainly the most advanced in the whole affected area. The Asian Development Bank estimated the amount to be used in the reconstruction process to be over $1.5 billion (Karan 65). Most importantly, the greatest challenge in the Indonesian case was the long-term effect of the tsunami on the critical tourism industry which contributes greatly to the economy of the country. It was actually realized that tourism, which accounted up to 4.6% of the country’s GDP prior to the tsunami, was greatly affected given that most tourists had to avoid the area for several months that followed the event (Murty 65). Moreover, the tourism infrastructure was totally destroyed and this created the need for reconstruction before