Economic impact projections range from HK$4.29bn to HK$8bn after Hong Kong’s worst storm in more than half a century
The economic impact of Typhoon Hato will spiral into the billions, with one estimate projecting an impact of HK$8bn.
Ten people died and more than 200 were injured when Hong Kong’s worst storm in 53 years struck last week. As the vital financial hub picks up the pieces from the event, predictions about the economic impact have started to develop.
“The estimated economic impact of a typhoon warning signal 8 or higher on Hong Kong is, according to the Swiss Re Institute, HK$4.29bn,” Dylan Bryant, branch manager, North Asia, Swiss Re Corporate Solutions, told StrategicRISK.
“In addition to this we see moderate impact from physical damage in Hong Kong following Hato, it appears the more severe damage will come from Macau and Guangdong with many industries impacted by flooding of their buildings.”
Bryant said that although physical damage was moderate in Hong Kong, a bigger concern for corporate clients was the economic loss caused by non-damage business interruption.
“Many offices suffered damage to windows, including our own offices. However many companies, small and large, sent employees home and were forced to close resulting in a day of lost trade, production and revenue.”
Bryant said events such as these tend to reinforce for businesses the importance of insurance and especially insurance for the loss of revenue or profit.
“A typhoon warning signal 8 results in far greater economic impact typically than the physical damage [and] we saw this again for Typhoon Hato in Hong Kong.
“This event will likely expand the role that insurance plays in building economic resilience. We will now likely see a shift towards insuring the economic impact of typhoon warnings as well as increased coverage for the physical assets,” added Bryant.
However, Chinese University associate professor of economics Terence Chong Tai-leung, told the South China Morning Post that the economic loss caused by Hato could actually be closer to HK$8bn. Tai-leung’s estimate is based on the average value of the gross domestic product generated in one day.