ECONOMIC RESILIENCE UNDER ENVIRONMENTAL SHOCKS: THE IMPACT OF NATURAL DISASTERS ON ASIAN GROWTH PERFORMANCE

Abstract

This study examines the impact of natural disasters on economic performance in eight Asian countries—Bangladesh, China, India, Indonesia, Japan, Pakistan, the Philippines, and Vietnam—over the period 2002–2023. Given the increasing frequency and intensity of environmental shocks in Asia, understanding their macroeconomic consequences is important for sustainable development and policy formulation. The study employs panel data techniques to analyse the relationship between real GDP per capita and natural disasters, measured by disaster-related deaths. In addition, government consumption, trade openness, human capital, and foreign direct investment (FDI) are included as control variables. To address unobserved heterogeneity across countries, the Fixed Effects Model is applied, and the Hausman specification test confirms its suitability over the Random Effects Model. The empirical results indicate that natural disasters have a statistically significant negative effect on economic performance, suggesting that higher disaster-related mortality is associated with lower real GDP per capita. Government consumption and human capital are found to positively influence economic performance, highlighting the role of public expenditure and human capital development in supporting economic stability. FDI shows a weak positive effect, while trade openness is statistically insignificant. The findings suggest that strengthening disaster preparedness, improving human capital, and enhancing institutional capacity are essential for mitigating the adverse economic effects of environmental shocks in Asia.