But the biggest effect on the world economy may yet come in further roiling oil prices that already have cast a pall on the global recovery.
That's because the 8.9-magnitude quake forced the shutdown of a number of Japan's oil refining facilities as well as some of its nuclear power plants. The loss of substantial refining capacity in the world's third-largest economy is likely to inject more volatility into petrol prices - raising the possibility of even higher pump prices.
Industry experts say that if Japan cannot get its refineries back online quickly, there will be a spike in that country's demand for petrol, diesel and jet fuel. Global suppliers might find it more profitable to increase shipments to Japan instead of selling the fuel elsewhere, resulting in a bidding-up of prices.
At least two nuclear power plants in Japan were reported to have closed after the earthquake. An extended shutdown would probably push up demand for fossil fuels.
Oil prices declined sharply on Friday, with crude futures briefly dipping below $US100 a barrel. Investors figured that damage to refineries as well as disruptions to Japan's economic activity would result in reduced demand for petrol, easing some of the global supply concerns from the political turmoil in Libya and elsewhere in that region.
The fallout from the earthquake comes at a delicate period of the global economy.
The US and some other countries have shown signs of a broadening recovery. At the same time, higher oil and food prices, along with ongoing fiscal troubles in Europe, have raised concerns about inflation, a possible tightening of credit by central bankers and the prospect of slower growth.
Financial markets in Asia and Europe took an immediate hit on Friday as investors unloaded shares of insurance companies, leading Japanese makers of autos and electronics and some other global companies.
The reaction on Wall Street was more encouraging: the Dow Jones industrial average climbed back above 12,000, rising 59.79 points, or 0.5 per cent, to 12,044.40. The Australian market was expected to open steady tomorrow.
In Japan, the Nikkei closed down 1.7 per cent, with the Japanese car industry hit particularly hard. Nissan, Toyota and Honda all shut down plants. Honda reported the death of a 43-year-old worker at its research centre in Tochigi.
The disaster also has added an element of uncertainty for global rice prices. The Japanese region hit by the tsunami is a major production area for rice. The world's rice supply had been forecast to be robust but economists warned that the effect of the tsunami on Japan and other grain-growing areas in the Pacific Rim may temporarily fuel already-rising global food prices.
Paul Donovan, a global economist for UBS Investment Bank in London, said the short term wouldn't be pretty as companies struggle to repair damage and restore production and as insurance firms prepare to pay hefty claims. He offered a more bullish forecast for Japan and the global economy over the long haul.
''The process of reconstruction increases employment, demand and economic activity,'' he said. ''And Japan's economic activity will increase.''
But unlike the earthquake that struck heavily industrialised Kobe, Japan, in 1995, analysts said they did not expect Friday's events to dramatically undercut Japan's industrial output or cause damage approaching the $100 billion in destruction that Kobe suffered.
Damage to manufacturing facilities and offices ''appears limited'' at this point, wrote Dan Ryan, an analyst with the consulting firm IHS Global Insight. European-based analysts with Japan's Nomura bank noted in a conference call that the extensive damage caused by the Kobe earthquake, which knocked out an equivalent of 2.5 per cent of Japan's GDP, closed major ports and undercut manufacturing.
''This has not been concentrated in urban areas,'' said Nomura economist Peter Westaway. Global insurance companies lost an estimated $5 billion in their market capital. For the latest updates PRESS CTR + D or visit Stock Market news Today
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