Enhancing macroeconomic resilience to natural disasters and climate change in the small states of the Pacific

This is the first cross-country IMF study assessing the impact of natural disasters on growth in the Pacific islands as a group.

A panel VAR analysis suggests that, for damage and losses equivalent to 1 percent of GDP, growth drops by 0.7 percentage point in the year of the disaster. The authors also find that, during 1980-2014, trend growth was 0.7 percentage point lower than it would have been without natural disasters.

The paper also discusses a multi-pillar framework to enhance resilience to natural disasters at the national, regional, and multilateral levels and the importance of enhancing countries’ risk-management capacities. It highlights how this approach can provide a more strategic and less ad hoc framework for strengthening both ex ante and ex post resilience and what role the IMF can play.

Working Paper No. 15/125