Published December 28, 2004
WASHINGTON – The devastating earthquake and tsunamis (search) that hit Asian countries will deal a fresh blow to the tourism industry there but aren't expected to produce crippling economic problems in the region or in the United States, economists say.
Private economists were scrambling Monday to assess the economic toll of Sunday's deadly natural disaster. For now, they foresee a limited economic impact — largely affecting tourism — because the disaster hit coastal towns and not big manufacturing centers, analysts said.
"The impact on the United States is expected to be minimal mostly because thect any major production facilities to be affected," said Rakesh Shankar, an economist who focuses on Asian economic issues at Economy.com.
In that regard, this disaster is quite different from the 1995 earthquake that struck the major industrial center of Kobe, Japan, and destroyed much of its port, analysts noted.
"The strongest negative impact will be for countries like Thailand and Sri Lanka (search). Both of them rely on tourism," Shankar said. "Tourism is really the industry that is going to get hit hardest by this. Even so, we don't expect the impact to last longer than a year at the most." He said millions of dollars in the tourism business probably would be lost.
Tourism in the region had been on the rebound after a slump as travelers were shaken by fears about SARS (search) — severe acute respiratory syndrome — and terrorism, analysts said.
Shankar and other economists believe the economies of the affected countries will weather the disaster and won't be thrown into a recession or a serious economic downturn. But they may log somewhat slower economic growth, analysts said.
"I think the human toll is severe. At the same time, economically, I don't see it affecting the global economy very much," said Sung Won Sohn, a chief economist at Wells Fargo, who has traveled extensively through the region.
Analysts said rebuilding efforts — assisted by international aid — will eventually help economic activity in the countries.
So far, experts said they are unaware of any major disruptions in international trade.
"Right now it's business as usual at the ports," said Bill Anthony, a spokesman at U.S. Customs and Border Protection. However, he said, there may be a temporary slowdown if ships are rerouted.
Sri Lanka is a big exporter of textiles and apparel to the United States and other countries. India exports textiles, gems and jewelry, among other goods. Indonesia's exports include oil, gas and electrical appliances. Malaysia's exports include electronic equipment, petroleum and liquefied natural gas. Thailand's exports include computers, transistors and seafood.
"I don't see any major impact on U.S. manufacturers," said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a research group. Waldman said the countries affected aren't huge markets for U.S. manufacturers.
Waldman also didn't expect major supply disruptions to U.S. companies. But there's the possibility of "transportation bottlenecks and uncertainties with orders and shipping," he said.
The National Association of Manufacturers had no immediate assessment.
From January through October of 2004, U.S. exports to the Asian countries were far outweighed by imports from them, Commerce Department figures show:
—India: U.S. exports came to nearly $5 billion; imports totaled $13.1 billion.
—Indonesia: U.S. exports were nearly $2.2 billion; imports came to $9.2 billion.
—Malaysia: U.S. exports totaled $8.9 billion; imports totaled $23.3 billion.
—Sri Lanka: U.S. exports came to just $133.5 million; imports totaled $1.6 billion.
—Thailand: U.S. were valued at $5.2 billion; imports totaled $14.3 billion.
In comparison, U.S. exports to Canada, a major trading partner, totaled $157.5 billion, while imports from Canada came to $212.4 billion.
Treasury Department spokesman Rob Nichols said it was too soon to assess the possible economic impact of the disaster on the region.