Philippines: The Aftermath Of Super Typhoon Yolanda
The Philippines is suffering from the devastating impact of Super Typhoon Yolanda (Haiyan), with initial assessments indicating that the storm was probably the most damaging in the country's history. Although appraisals are still in their preliminary stages, government officials are already estimating the death toll to be above 10,000 in the hardest-hit city of Tacloban alone. Such a staggering figure would also make Yolanda the deadliest natural disaster in the Philippines' history. Tropical Storm Uring in 1991 killed between 5,000 and 8,000 people.
The economic toll in the most affected areas is also estimated to have been catastrophic. According to government officials in Leyte (the hardest hit-province, of which Tacloban is the capital), the storm destroyed as many as 80% of the structures in its path. Although the latest Situational Report from the National Disaster Risk Reduction And Management Council (NDRRMC) states total reported damages to infrastructure and agriculture at PHP296mn (US$6.8mn), we believe that this figure reflects only a small fraction of the true damages that will come to light once more thorough assessments are completed. Indeed, the same report estimates that approximately 9,679,059 people (or nearly 10.0% of the Philippines' total population) were affected by the typhoon, spread across 51 cities in 41 different provinces.
Given the sheer scale of devastation caused by Yolanda, it is highly possible that total damages will surpass those of the previous record holder, Typhoon Bopha, which struck the Philippines in December 2012 at a cost of approximately US$1.0bn. Furthermore, although extensive aid pledges have been pouring in from around the world, the availability of critical supplies in the hardest-hit areas remains extremely limited as a result of logistical difficulties.
According to remarks from Philippine Finance Minister Cesar Purisima, Yolanda could hit the affected region's GDP (which he estimates comprises approximately 12.5% of the nation's economy) by as much as 8-10%, which would translate as a reduction of approximately 1.0% to the Philippines' overall GDP in 2014. While the devastation wreaked by Super Typhoon Yolanda is unique in its enormity, Purisima estimates that each year, natural disasters shave approximately 0.5 percentage points (pp) from the Philippines' GDP.
Meanwhile, although Manila (which accounts for more than a third of the Philippines' overall economic output) was largely spared from Yolanda's worst effects, reinsurance firm Swiss Re found it to be the most vulnerable to natural disasters out of the 616 cities that it studied in a recent report, further underscoring the Philippine economy's substantial exposure to extreme weather events. While we deem it too early to assess our real GDP growth forecasts of 6.9% and 6.0% for 2013 and 2014, respectively, we note that the typhoon's aftermath may weaken the Philippine economic growth outlook heading into next year.