From “Sichuan earthquake has a marginal impact on the nation’s overall economic growth and inflation” by Qian Wang, Asia economic research, JPMorgan, May 13:
The impact of the earthquake on the macro economy will be much less than that of the snowstorms earlier this year … The impact will also be less than that of summer floods, which happen quite frequently in southern China, the most important region in terms of manufacturing and agricultural output … The earthquake is more a regional event, and Sichuan is an inland province located in the southwest of China, and not a major manufacturing hub. Sichuan’s total GDP is only about 4.2% of the country’s total GDP and industrial production is only 2.5% of the total production in the country.
From “Earthquake in China not an immediate capital issue for insurers” by Fitch Ratings, May 15:
The insured losses, according to risk modeling firm AIR Worldwide, are estimated to be between US$300 million and US$1 billion, as compared to the US$41 billion in insured losses arising from the hurricanes in the US in 2005 … The epicenter of the earthquake is located in a predominantly rural area, where insurance coverage is minimal … More importantly, earthquakes are generally not covered under residential property and motor policies. The bulk of the non-life claims are, therefore, expected to arise from larger-scale commercial properties farther away from the earthquake’s epicenter … Payouts on life insurance policies are also expected to be sizable … In Wenchuan county alone, China Life has over 110,000 life insurance policies; [it] has received 150 claims so far, amounting to US$19 million … The insured losses from the earthquake will likely be spread among the largest companies, namely: The People’s Insurance Co of China, China Life, Ping An and China Pacific Insurance. A large portion of the losses facing the direct insurance market will likely be passed on to China Reinsurance, the country’s national reinsurer, depending on the structures of the direct companies’ reinsurance programs.
From “A dilemma for monetary policy” by Moody’s Economy.com economist Matt Robinson and associate economist Alaistair Chan, May 14:
For the most part, Asia Pacific economies have performed relatively well in the opening months of 2008. Exports have held up reasonably well, while domestic activity and intraregional trade have sustained growth. However, the outlook is becoming increasingly cloudy. Shipments to the US are declining, while sales to the EU have slowed. The intensifying downturn in foreign demand will dampen growth this year. Meanwhile, inflation has accelerated, strengthening with the upswing in global commodity prices. Soaring inflation and slowing growth prospects cause headaches for the region’s central banks and policymakers.