The effects of disasters—such as hurricanes, terrorist attacks, and other major catastrophes—on the international economic accounts are embedded in the source data that BEA uses to produce the statistics. Source data providers generally cannot isolate those effects, and thus, BEA cannot separately quantify the impacts of the disasters. Nevertheless, there are several possible impacts of the disasters on the international accounts as discussed below.
Trade in goods may be impacted if the disaster results in port closures, which could affect the flow of traded goods. During port closures, shipments of goods may be diverted, amended, or canceled. Diverted import shipments may enter through another U.S. port or be transshipped through Mexico or Canada. Disasters such as hurricanes and earthquakes may cause power outages or inaccessibility to facilities, resulting in disruptions to the production of traded goods. For example, a hurricane occurring in the United States may cause a temporary loss of petroleum production and refining activity in the affected area, thus affecting exports of petroleum and products.
Trade in services may be impacted if service activities are interrupted by the disaster. For example, transport services may be affected by port closures and by diverted shipments of goods. Port closures and other disruptions to service activities may also affect travel. Similarly, if business operations are disrupted, trade in certain business services could be impacted.
The impact of the disaster on insurance services is likely to be small because BEA uses normal rather than actual losses to measure insurance services. For more information, see the FAQ “How are property and casualty insurance services measured in GDP?”
Primary Income and Financial Flows
Direct investment primary income and financial flows between parents and their affiliates may reflect the effects of the disaster on the earnings of companies located in the affected area. For example, affiliates affected by a hurricane may halt production temporarily, require repairs to facilities, or face difficulties in acquiring inputs and shipping products, all of which could affect their earnings. Any additional funding provided by parent companies to their affiliates in the wake of a disaster would be reflected in financial flows.
Disasters may affect secondary income, which includes U.S. government and private transfers, such as U.S. government grants, personal transfers (remittances), charitable donations, and insurance-related transfers. For example, in the case of a hurricane or an earthquake occurring in the United States, any donations for disaster relief and remittances from nonresidents to families and friends in the affected area would be reflected in secondary income receipts.
Insurance claims are typically treated as current transfers in secondary income. However, if BEA classifies a domestic event as a disaster, then the losses recovered from foreign insurance companies following the event are recorded as transfer receipts in the capital account for the affected quarter. This is the case if the associated property losses or the insurance payouts exceed 0.1 percent of GDP. For more information, see the FAQ “How do losses recovered from foreign insurance companies following natural or man-made disasters affect foreign transactions, the current account balance, and net lending or net borrowing?”