Economic Consequences of Cyclone SIDR

Cyclone Sidr, which hit southern districts of Bangladesh on November 15, claimed the lives of at least 4,000 people and affected some 5.5 million others. The massive destruction jeopardized our economy severely. To measure and analyze the damage ESC organized an informal Round Table discussion.

In the discussion we pointed out the following issues:

Growth concerns: The economic impact of the cyclone may be more significant than the political fluctuations. The economy was already sluggish before the cyclone hit due to flash floods.

- Higher oil prices were sapping government budgets and increasing fertilizer and transport costs.

- The area hit by Cyclone Sidr is often described as the national rice basket and the destruction of crops there will have a significant short-term impact. There is a possibility of price hike of food grains in near future. Some 2,000 square kilometres of rice crops have been completely destroyed, pushing up prices by 15% in some places. They are likely to increase further as the government moves to boost dwindling rice reserves.

- The government has requested 500,000 tonnes of rice from donor countries in order to make-up a shortfall -- the country is normally self-sufficient in rice.

- Rice imports mean that problems with grain supply are unlikely to result in a severe shortage of food or famine (as occurred after the 1970 cyclone), though the peak of any shortages will not be clear until March -- when rice stocks are traditionally at their lowest.

- Other agriculture sectors have been affected -- livestock worth 44 million dollars was destroyed.

- Reconstruction will put further pressure on budgets that are already strained by the need to cover higher oil subsidies.