New Delhi: Emerging economies like India, China, Philippines and Indonesia face the highest economic risk from natural disasters, says a report by analysis and mapping firm Maplecroft.
Despite the US and Japan having the highest economic exposure to natural hazards, the aforementioned emerging economies are proportionately at greater risk from them as they lack the capacity to combat the impact of a major disaster.
According to the Natural Hazards Risk Atlas 2011 released by Maplecroft, 196 countries were ranked with respect to their economic exposure to natural hazards like earthquakes, tsunamis, tropical cyclones, floods and drought.
As per the ranking, USA (1), Japan (2), China (3) and Taiwan (4) were categorised as "extreme risk" in terms of their absolute economic exposure to natural hazards. Mexico (5), India (6), Philippines (7), Turkey (8) and Indonesia (9) and Italy (10) were classified as "high risk".
However, a different perspective emerges when countries are ranked in terms of socio economic resilience, as per which China, India, the Philippines and Indonesia feature in the `high risk` category, while countries like the US and Japan were rated as `low risk`, Maplecroft said.
Maplecroft`s analysis states that large developed economies like the US and Japan have the highest economic exposure to natural hazards, but they also have measures in place to withstand the impact, such as their economic strength, strong governance, well established infrastructure, disaster preparedness and tight building regulations.
Citing the example of Japan, the report said nearly 40 percent more people were exposed to tropical cyclones in that country than the Philippines. Yet if both countries experienced similar sized cyclones, fatalities in the Philippines would be 17 times higher than in Japan.
"The emerging economies, although buoyant with growth, lack the socio-economic conditions to limit their disaster risk. This lack of resilience could threaten their economic growth and the extent to which businesses with operations there hope to flourish," Maplecroft CEO Alyson Warhurst said.
According to Maplecroft, due to the rising economic power of the major emerging economies of China, India, Philippines and Indonesia, the occurrence of a major natural disaster in these countries may also have a global economic impact and severely affect the supply chains of businesses.
"Much of the growth of emerging economies is now based on increasing domestic consumption. As their relative purchasing power grows, so too will the absolute economic value exposed to natural hazards," Warhurst added.
"Investors, who are currently diversifying portfolios into Asian countries, also need to factor natural hazard risks into their investment strategies," the report said.
Natural hazards have been more costly to the world economy in 2011 than any other year on record. "The tsunami in Japan, tornadoes in the US, the earthquake and flooding in Australia have all contributed to USD 265 billion for the first six months of the year," the report said.