Photo by Tenaciousme
In the short term, people in Japan are of course focusing on humanitarian efforts and the dangers associated with the power plants in Fukushima, but the issue of the economy is likely to creep to prominence over the coming months as the suffering in the north of the country is replaced by crises in other countries.
Here are three organizations current assessments:
- The British bank notes that the overall impact on the economy is expected to be much lower than it could have been:
- The four prefectures most heavily affected by the Tohoku earthquake are Iwate, Miyagi, Fukushima and Ibaraki. This region accounts for about 6-7% of the overall Japanese economy, including 6.2% of GDP, 6.8% of the population, 7.2% of private-sector capital stock, 6.8% of overall businesses, 6.2% of residential housing stock, 6.3% of households and 6.5% of household life insurance.
- Business Insider notes that the Swiss bank has stated the country’s political deadlock is no longer likely to be a factor in Japanese business "The threat of fiscal stalemate in the Upper House caused by the opposition LDP blocking the budget of the DPJ is likely now to be alleviated as parties are likely to work more closely together in response to the tragedy."
- IHS has worries about the short-term impact of the earthquake: "In the case of Japan’s … recent calamity, given the damage to the electricity power generation capacity, the impact on economic growth could be greater (than previous disasters)."
- However, it sees positive signs for the future:
- "For years, Japan was famous for having high savings rates and large holdings of private wealth—much of this actually held in cash—which will now prove beneficial during rebuilding. But at this point, the greatest concern is the government’s response."
- The organization also notes that "despite concerns about Japan’s already high debt levels, financial markets are likely to take a benign view of the Japanese government’s reconstruction spending."