Impact of Natural Disasters on Economic

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IMPACT OF NATURAL DISASTERS ON GDP (RELATE TO THE GDP METHOD USED)

Due to rising population, climate changes and environmental degradation, natural disasters is increasing in frequency. There are several factors which affect a country’s vulnerability to natural disasters; its geographic size, the type of disasters, the strength and structure of its economy and prevailing socioeconomic situation.

Japan uses the expenditure method to measure national income. The expenditure include personal consumption, domestic investment, government spending, and exports. We will use March 2011 Tohoku as a case study on the impact of natural disasters on Japan GDP.

Initial Impact of Natural DIsaster

Personal Consumption - The immediate aftermath of the earthquake and tsunami is only natural for consumption to decrease due to stores being closed or destroyed in the disaster area and reduced income from the disruption in work.

Exports - Japan’s economy is largely export-based, and the immediate aftermath of March 2011 earthquake, manufacturing plants have been forced to shut down, Japan’s GDP loss is estimated at 0.7 percent to 3.0 percent. Often, however, the quantitative impact of this first round is small, particularly when the disaster happens to Japan whom is the third largest economy in the world.

Tourism - The devastating earthquake and tsunami, a growing death toll and search for missing persons, and an evolving nuclear radiation threat are causing many travelers to cancel trips to Japan. International arrivals went down by 50% in March and 62% in April. Inbound leisure tourism fall by an estimated 90% in the two months, according to Japan Tourism Agency, with domestic travel down almost by 20% over the period. The disruption to demand was felt throughout the country and not just in the north eastern region that was directly affected by the earthquake and tsunami. This decrease the consumption of domestically produced goods and services and bring down the...
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