The recent back-to-back typhoons in the Philippines have really crippled their small entrepreneurs. In this country consisting of thousands of beautiful islands, these small businesses are what make the economy thrive, so recovery has been and will be an uphill battle. A whopping 99.7 percent of all businesses in the Philippines are classified by the Department of Trade and Industry as micro, small, and medium enterprises. It got me thinking a bit about how other natural disasters affect the economies of other countries.
The service sector contributes more than half of overall Philippine economic output. Most of the damage was in Manila, which contributes 40% of the country's GDP. Not only this, but a lot of the damage occured in Luzon, where most the country's rice is produced, a staple to not only the economy but to Filipino life. The big problem with the small businesses being hurt is a little something called insurance. They don't have it. However much they have saved is what they will need to rebuild their stores, restaurants, and repair shops. Frankly some don't have the funding to do so. Moreover, more than $10 billion in loans were at risk of default because of the storms.
The devastation “could cause lasting poverty and severe difficulties for the families that rely on their small businesses to survive,” Jose Enrique Africa, the Ibon Foundation’s economist and research director, said in an interview with the New York Times. The government has many financial problems of their own to deal with, so foreign aid will be a huge key. Any reduction caused by the typhoons may be offset by strong remittances from overseas Filipino workers, who will send more not just because of aid but because of the approaching Christmas season, though this increase may not be enough.
Other natural disasters have brought the country that it occurred in, and sometimes even the world together. The massive rebuilding of infrastructure can pump much needed funds into the economy and local workers. The updates are good for an economy and country in need of repair. But with already the huge amount of government spending and deficits, smaller governments like the Philippines struggle with helping out. Time can only tell what will happen, but I will hope that many of these entrepreneurs will get back onto their feet and thrive in the future.