The world dodged a bullet last week after an 8.6 magnitude earthquake shook off the coast of Indonesia on Wednesday. The quake prompted immediate tsunami warnings to all countries along the Indian Ocean in fear of a repeat of the 2004 catastrophe that took the lives of 220,000 people.
The warning was lifted as soon as authorities knew that the rumblings wouldn't spark, quite literally, a wave of disaster. Ultimately, the earthquake didn't cause any damage, which, first and foremost, is great for those living in the area that have already experienced such devastation in the past, along with the Asian economy.
When the 2004 tsunami hit, it wiped out distribution and manufacturing facilities that were integral for the global supply chain. While it certainly hurt businesses across the world that relied on those supplies, those companies were able to only suffer from temporarily unbalanced supply and demand until they found alternatives. However, the economies of the nations in Southeast Asia, which needed financial support from businesses more than ever before, were unable to bounce back without revenue from their exports.
But, now that Southeast Asia officially won't be affected by this most recent threat, the Asian Development Bank (ADB) predicts 5.2 percent in 2012, according to Bloomberg Businessweek. It's important to remember the economies in that area are vastly different than our own.
"Rising income inequality threatens the basis for the long-term growth by undermining social cohesion and worsening the quality of governance, and also increasing pressure for more populist policies," Changyong Rhee, the ADB's chief economist, told Bloomberg Television.
Because poverty is such an issue in Southeast Asia, there are a lot of opportunities for the production of bootleg supplies stamped with very realistic, yet counterfeit labeling. Supply chain businesses can sigh in relief since the tsunami didn't occur, but that doesn't mean they can sit back and trust the system.