The Philippines was hit by Typhoon Haiyan late last week and significant devastation followed. The archipelago is battered by tumultuous weather relatively frequently due to its geographical position; situated in an area known as the Ring of Fire, where many of the world’s earthquakes and volcanos occur.
Typhoon Haiyan is one of the strongest tropical cyclones ever recorded to make landfall. Authorities estimate that 9.5 million people (10% of the population) have been directly affected by the typhoon, according to the National Disaster Risk Reduction and Management Council. Almost 20,000 homes were damaged or destroyed and four airports remain shut. Half of the Philippines’ sugar cane-growing areas and a third of its rice-producing land have been destroyed, according to the Commodity Weather Group. Guiuan of Samar Island (located on the eastern side of the Philippines) was hit particularly bad, with authorities indicating all buildings and structures had incurred damage. Electricity, water and communication links are currently cut off to Guiuan.
In recent years, the Philippines has improved disaster mitigation and relief strategies to mitigate the damage. But like any significant weather event, it comes down to chance. Typhoon Haiyan’s total economic impact may reach US$14 billion, according to Kinetic Analysis Corp. The government has so far pledged US$533 million from various agencies and a discretionary fund designed for disaster relief and rebuilding.
Katrina Ell is an Associate Economist at Moody's Analytics.
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