The impact of the tsunami is likely to push an additional 645,000 people below the poverty line in India, according to an Asian Development Bank estimate.
In south Asia, 2 million people may slip into poverty. However, economies were unlikely to be affected significantly, said an ADB report.
"The poverty impact of the tsunami will be enormous. Poverty is potentially the most important effect of this natural disaster. But the economies of the affected countries, except those of Sri Lanka and the Maldives, should emerge with minimal damage," said Ifzal Ali, chief economist with the Manila-based multilateral development bank.
Ironically, the tragedy could trigger a surge of economic activity in the region that may have positive long-term effects.
"Reconstruction from natural disasters requires new investments that should have a positive impact," the report stated.
"And investment should translate into jobs. The aid process has already increased demand for a range of domestic goods and services, including food, water, medicines, building materials, clothing, transport and communication services, which will benefit a number of domestic businesses. Therefore, it is possible that the overall impact could well end up being somewhat positive," it added.
In Indonesia alone, nearly 1 million people could be thrown into poverty by the lingering effects of the tsunami's devastation. In India, the number of poor in the country could increase by 645,000. In Sri Lanka, the figure was estimated at about 250,000.
In the Maldives, about half of the country's houses were affected and more than 50 per cent of the population could fall into absolute poverty, resulting in 23,500 additional people going below the poverty line.
Asia's resilience to external shocks would, however, play a role in minimising the impact the disaster would have on the region's overall economic growth.
In Indonesia, India and Thailand, the damage was largely confined to rural areas rather than key economic and densely populated urban centres and industrial hubs that drive the region's economic growth, according to the report titled 'An Initial Assessment of the Impact of the Earthquake and Tsunami of Dec. 26, 2004, on South and Southeast Asia'.
In India, the economic impact should be minimal due to the huge size of the country's economy. The macro-economic impact is also expected to be minimal in Indonesia, Bangladesh, Malaysia and Myanmar.
In general, the region was well positioned to withstand such economic shocks. "Following strong growth from 2001 to 2004, the economies of India, Indonesia, Malaysia and Thailand should be in a strong position to overcome the tragedy. For these countries, recent growth has been strong, fiscal positions have improved, and external reserves are high, with the shock absorber of the disaster coming from the government's fiscal position," the ADB report said.
