Vanuatu economic recovery may take years
It may take years for parts of the Vanuatu economy to recover after Cyclone Pam.
An economist says it may take years for parts of the Vanuatu economy to recover after Cyclone Pam.
The Asian Development Bank's Milovan Lucich says the country is looking at a substantial slump as a result of the cyclone.
As Mr Lucich told Tom Furley, Vanuatu's economy was on the rise.
MILOVAN LUCICH: Vanuatu's economy has enjoyed a prolonged period of economic growth, more than a decade since the last period of negative growth. Growth has been driven primarily by tourism and also construction and real estate. Some contribution from agriculture as well.
TOM FURLEY: Are you able to give me any numbers or figures around those areas?
ML: Well tourism is a major contributor to Vanuatu's economy. Tourism related sectors account for approximately 25% of GDP. Agriculture also accounts for a similar percent of GDP but it also is very important in that 80% of the population is involved in agriculture one way or another, so it has a very important affect on people's livelihoods.
TF: And so obviously that'll have been very much interrupted by this cyclone?
ML: Yes you'd expect agriculture to be interrupted both in terms of crop damage and also disruption of transport links.
TF: And so now with Cyclone Pam, a lot of their primary industries will be interrupted. I know it's still too early to say how much damage has been done, but from an economy point of view looking forward what do you think is going to happen here?
ML: There's going to be very substantial short term negative impacts from the cyclone. Particularly to the tourism and agriculture sectors. So certainly I think over the next few months those sectors will be severely disrupted. We will expect a pick up in growth later in the year as some of the spending on infrastructure picks up and some of the reconstruction spending gets underway. Nevertheless there will be quite substantial impacts to growth this year. Certainly this year growth will be considerably lower. We would expect a rebound in growth next year as construction gets underway and as tourism and agriculture sectors recover. It will take awhile to get back to pre-cyclone levels of activity. In the experience of other natural disasters in other tourists hubs has generally seen it takes at least one to two years for tourism to fully recover.
TF: And in terms of a figure on this, what do you see the growth rate dropping down to?
ML: I think growth will struggle to be positive this year. The negative shock will be quite large so it will be very difficult for Vanuatu to experience positive growth this year.
TF: Do you see that perhaps turning back into the positives in the next few years?
ML: Yes certainly as reconstruction spending picks up and the tourism and agriculture sectors recover Vanuatu will return to positive growth.
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