The global economy could withstand widespread disruption caused from a global natural disaster or nuclear attack for only one week as governments and businesses are not sufficiently prepared to deal with unexpected, catastrophic events, states a report by respected think tank, London-based Chatham House.
Events such as March's devastating earthquake and tsunami in Japan and the eruption of a volcano in Iceland last year have shown that key sectors and businesses can be severely affected if disruption to production or transport goes on for more than a week. The ash cloud from an Icelandic volcano halted air traffic over Europe for over a week, costing the European Union 5-10 billion euros and pushing several airlines and travel companies to the verge of bankruptcy.
After the Japanese earthquake, tsunami and nuclear crisis in March, global industrial production declined by 1.1 percent the following month, according to information provided by the World Bank. Similar drops in production have occurred in the past few months, due to catastrophic flooding currently plaguing Thailand. Costs can escalate quickly when transport or major production hubs are disrupted for more than a few days, which can in turn threaten food and water supplies and energy and communication networks, the report said. In the event of prolonged disruption, some businesses would be forced to cut investment and jobs or consider closing down, leading to a permanent reduction in countries' growth.
Climate change and the scarcity of untainted water during a major catastrophe will only add to the risks to populations, which would put added strain on infrastructure and resources.