Vanuatu economy to suffer from main industry losses
A disaster economics expert says the next few years will be difficult for Vanuatu's economy with many of its major exports impacted by Cyclone Pam.
Transcript
A disaster economics expert says the next few years will be difficult for Vanuatu's economy with many of its major exports impacted by Cyclone Pam.
Much of Vanuatu's growth over the last decade has come from tourism and agriculture with each making up around 25 percent of the country's gross domestic product (GDP).
The Chair in the Economics of Disasters at Victoria University, Ilan Noy told Tom Furley about the struggles ahead for Vanuatu's economy.
ILAN NOY: It's a fairly poor country. Particularly when you look at disasters of this magnitude and of course we don't exactly know the magnitude of the disaster at this point. When you look at disasters of similar magnitude, fairly catastrophic ones that have hit the centre of economic activity, in this case in Port Vila, then there are typically very prolonged, adverse consequences to the economy. It's very difficult for countries which don't have the resources for reconstruction to recover. It's even difficult for countries which do have the resources. So we see that in Christchurch it takes a while. But in countries like Vanuatu and similar events elsewhere, there is a potential for a very prolonged slow-down in economic activity because of the lack of funds for a reconstruction.
TOM FURLEY: And so how long-term are we talking here? Are we talking months or are we talking years?
IN: We're talking years. Hopefully, we're not talking decades, but we're talking years for sure.
TF: Can you give me some examples of the types of impacts that we may be seeing from this?
IN: The problem is, in poor countries, there is both the lack of institutional capacity, the lack of resources, the lack of human resources, the lack of skilled labour, the lack of and so on to speed up the reconstruction efforts. And without the infrastructure especially, which you need for a thriving economy, then it takes a very long time. Tourism is a major export in Vanuatu. It exports a few cash crops and those were probably damaged heavily in the typhoon - that will probably recover fairly quickly, but tourism typically stays a while after such an event, both because there is damage to infrastructure, the tourism infrastructure, and because of the perception of a future event. So with the decline in tourism, damage to the main cash export crop, and the need to do emergency management in the next few months, it's going to be a difficult time for Vanuatu.
TF: So looking forward, what are the next steps to ensure economic recovery for Vanuatu?
IN: First, right now, you need to worry about the emergency and making sure that people are in shelter and have the basic things they need. But after that you need to make sure that the Vanuatu government has the resources available to reconstruct. But the need will be there for quite some time, so maintaining support for Vanuatu, both the public sector support and the private sector support, I think is important in the long-term.
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