Philippines flooding
(Photo: Reuters)

Some of Asia's most important growth economies have the highest financial risk from the threat of natural hazards, says risk analysis firm Maplecroft, just one week after the flooding of Manila, Philippines.

The Natural Hazards Risk Atlas, compiled by risk analysis firm Maplecroft, maps the financial risk posed by natural disasters around the world, weighing countries' financial activity against the threat they face from extreme climatic turbulence.

Having assessed the threat posed by 12 separate natural hazards to 197 different states worldwide, the researchers found that Bangladesh, Myanmar, India, Vietnam and the Philippines are among the 10 countries whose key cites and trading hubs face the greatest threat from natural disasters.

Helen Hodge, head of maps and indices at Maplecroft, said: "High exposure to natural hazards in these countries [is] compounded by a lack of resilience to combat the effects of a disaster, should one emerge.

"Given the exposure of key financial and manufacturing centres, the occurrence of a major event would be very likely to have significant impacts on the total economic output of these countries, as well as foreign business."

Indeed, the report claims that many multinational companies are threatened by association, given they have established offices in the high-risk Asian countries.

"The resulting impacts [of natural disasters] in the Asian growth economies of Bangladesh, the Philippines, Myanmar, India and Viet Nam would not only include disruptions to their domestic economies, but also to the operations and supply chains of many of the world's largest corporations who invest in these locations because of their significant growth opportunities."

"Impacts in these exposed Asian countries are also heightened by their economic fragility. Some of the highest risk countries have substantial economic outputs, but they are fuelled by large, poor populations, many of which live on marginal land such as flood plains, leaving constituent workforces at heightened risk and without the necessary resources to re-establish themselves in the aftermath of an event," the report added.

Damage to the Philippines

This month, the Philippines has been hit by some of the worst storms in recent history, which has so far clocked up Philippine pesos 400m ($9.6m) worth of damage to farm output and infrastructure, the nation's disaster risk reduction agency reported.

At the beginning of August, despite the absence of a typhoon, monsoon rains dumped 300 millimetres (12 inches) of rain in the Philippine's National Capital Region (NCR), or Metro Manila, and caused half of the area to be flooded.

Subsequently, Metro Manila has been paralysed with all efforts concentrated on rescuing residents from the flood and halted trading at the Philippine Stock Exchange, as well as the closure of schools and government and private offices.

Economic Planning Secretary Arsenio Balisacan also confirmed that the damage caused by typhoons and other disasters in 2011 reached Philippine pesos 59.2bn ($1.4bn).

The Philippine peso is leading today's decline in Asian currencies amid a worsening outlook for exports that drive the region's growth.

In Maplecroft's report, India ranked 5th in the Natural Hazards Relative Economic Exposure Index as huge areas of India are undergoing a sustained drought, which is having a significant impact on agricultural outputs.

Montek Singh Ahluwalia, India's deputy Chairman of the Planning Commission, recently estimated that the drought will shave 0.5% off the country's GDP, equivalent to approximately $8.4bn.

Maplecroft natural disasters map
Asia Natural Hazards Risk - Economic Exposure 2012 (Photo: Maplecroft 2012)

Capacity to Recover

While India and the Philippines are only two out of a list of countries that have the highest financial risk from the threat of natural hazards, some countries have the highest economic exposure to these elements but have the capacity to recover more quickly.

Maplecroft identified Japan, USA, China, Taiwan and Mexico as having the highest economic exposure to natural hazards in absolute terms.

One of Germany's largest insurance and reinsurance companies Munich Re, estimated that economic losses for 2011 stand at $380bn, with the March 2011 earthquake and tsunami in Japan accounting for approximately 55 percent of the total.

While major natural disasters like this would mean years of rebuilding in infrastructure and the economy for countries like the Philippines, Japan has the capacity to recover relatively quickly from natural disasters due to entrenched resilience factors including: economic strength, strong governance, established infrastructures, disaster preparedness and tight building regulations.