SINGAPORE (MNI) – The earthquake and tsunamis that hit Japan March
11 will likely shave 0.25 to 0.50 percentage point off of Japanese GDP
by mid-2011 but growth is likely to rebound strongly after that on
rebuilding efforts, the World Bank said Monday.
“If history is any guide, real GDP growth will be negatively
affected through mid-2011. Growth should though pick up in subsequent
quarters as reconstruction efforts, which could last five years,
accelerate,” the World Bank said in a report on the crisis.
The cost of total damage could amount to 2.5% to 4% of GDP, or $122
to $235 billion, it estimated.
Rebuilding costs will be significant in a country that is already
facing the largest government debt burden in the developed world.
The World Bank estimates costs of $12 billion from the current
budget, with “much more” needed in subsequent years. Rebuilding from the
Kobe earthquake of 1995 cost $38 billion over two fiscal years, it
noted.
“While it is too early to estimate accurately, the cost of the
damage is likely to be greater than the damage caused by the 6.9
magnitude Kobe earthquake in 1995. Private insurers are likely to bear a
relatively small portion of the cost, leaving a substantial part to be
borne by households and the government,” it said.
Supply chains that rely on Japanese manufacturing will likely be
hit, the World Bank said, and demand for fossil fuels will rise as Japan
and other countries rethink plans for nuclear power.
[TOPICS: M$A$$$,M$J$$$,MT$$$$,MGJ$$$]
