Long after Typhoon Morakot hit Taiwan, the destruction it wrought and the cost of post-disaster recovery will still be evident.
The disaster has devastated agriculture, tourism and traditional industries in southern Taiwan. Its impact is likely to have a negative effect on the nation’s third-quarter economic performance after the economy saw a record 10.24 percent year-on-year contraction in the first quarter.
The Council of Agriculture estimated agricultural losses at NT$12.1 billion (US$367 million) as of yesterday afternoon, with 26 percent of farmland in the disaster areas damaged by flooding or mudslides.
On Wednesday, the Ministry of Economic Affairs said Typhoon Morakot’s damage to power supplies, hydraulic systems and state-owned enterprises would cost at least NT$1.24 billion, while the Ministry of Transportation and Communications said it would need at least NT$20 billion to rebuild broken bridges and roads.
The cost of typhoon-related expenses is expected to rise as the ministries continue to receive damage estimates from subordinate agencies. On Friday, the Executive Yuan said it would propose a special budget of up to NT$110 billion for disaster relief and reconstruction. A special statute allowing for this budget should be presented to the legislature on Thursday.
Although agriculture and tourism are considered to be among the worst-hit sectors, their impact on the nation’s economy will be limited because they comprise a smaller share of GDP. However, in addition to the livelihoods lost, the damage to crops and livestock at key production areas in the south will mean higher prices for vegetables, fruit and meat in the coming weeks.
The economic losses caused by Typhoon Morakot would have been much higher had the typhoon struck the nation’s key manufacturing areas and industrial parks, such as those in Hsinchu and Taichung.
The overall economic impact could be short-lived, as the reconstruction effort, with the spending proposed by the Executive Yuan, could boost domestic investment and contribute to GDP growth in the medium term, offsetting the fallout from lower farming production, paralyzed transportation networks and lower tourism revenue in the south.
As economists wait for the government to release its second-quarter GDP figure and forecasts for the following two quarters and for the whole year on Thursday, it is important to remember that the economic losses are recoverable, even if the reconstruction will be slow. They are also measurable, while the suffering of disaster victims is not.
Looking ahead, one challenge will be implementing post-typhoon reconstruction work and disaster prevention measures. Past investments of billions of dollars have not worked out as expected, casting doubt on government effectiveness and preparedness.
But the biggest challenge is the potential loss of confidence in the government’s crisis management and emergency response ability. President Ma Ying-jeou’s (馬英九) administration has shown that it was not capable of handling an emergency of this scale.
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