That is according to an estimate from the World Bank. It says it might take the nation five years to repair the damage to property and infrastructure.
Swiss Re, the world's second largest re-insurance company, is saying the double tragedy has already cost it $1.2bn. Martin Schulz is senior economist at Fujitsu Research Institute in Osaka. Speaking to the BBC via a webcam, he says the final cost of the damage bill may not end up so high.
The bank estimates the damage to be between $123bn and $235bn. This is the equivalent of between 2.5% and 4% of the country's economic output in 2010.
The World Bank stressed that it was too early to accurately assess the cost of the damage, but said it was likely to be greater than the 1995 Kobe earthquake.
Potential costs of the disaster | ||
|---|---|---|
| | March quake and tsunami | Kobe earthquake 1995 |
| Source: World Bank report citing Japan government figures | ||
| Damage | $122bn-$235bn | $100bn (2% of GDP) |
| Cost to private insurance | $14bn-$33bn | $783m |
| Budget for reconstruction | $12bn from current budget and "much more" from next year's | $38bn over 2 years |
That caused $100bn of damage, then the equivalent of 2% of GDP.
The bank added that private insurance firms would only be liable for a small proportion of the cost of rebuilding, leaving households and the government to pay for the bulk of it.
Knock-on effects
The World Bank also predicted in a separate report that East Asia would be affected.
"In the immediate future the biggest impact will be in terms of trade and finance," said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region.
Japan's north-east region, where the earthquake and tsunami hit, is home to ports, steel mills and manufacturers of auto and electronic components.
"Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems," the bank said.
The other worrying factor for the region is that about one quarter of East Asia's long-term debt is denominated in yen.
For China it is only about 8%, but for Thailand it is about 60%.
A 1% appreciation in the Japanese yen translates into about a $250m increase in annual debt servicing on the yen-denominated assets held by the nations, the report points out. The region is expected to see less robust growth in 2011 as it fights inflation.
For the latest updates PRESS CTR + D or visit Stock Market news Today
No comments:
Post a Comment