March 16, 2011

Economic impact of Japan earthquake, tsunami, nuclear crisis 2011


Facts about ECONOMIC IMPACT of
Japan earthquake, tsunami and nuclear crisis of March 2011

click HERE for full post with general info, info on damage and destruction, facts on earthquake/tsunami/nuclear disasters

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A lot of time and effort went into researching this, I would love it if you left a comment and let me know if you'll be using the info somewhere. Thanks!


World economy
The disaster could derail the fledgling recovery of the global economy.

Energy: Although global oil prices fell initially due to fears of a short-term fall in demand from Japan, economists say the problems with Japan's nuclear energy reactors could put short- and long-term pressure on oil prices.

Electronics supply: Japan provides about 40 percent of technology components worldwide. Companies around the world could suffer a knock-on effect. Their operations could be disrupted because of Japan's key role in the electronics global supply chain - from chips for smartphones and computers to the liquid crystal displays for consumer products. The temporary shortages may drive up product prices in the short term.

Just as the damage cost estimates are rising, the global repercussion of the disaster could also worsen. Japan's No.3 position in the world economy means there will be ripple effects in other parts of the world. 

Japan economy
Japan's US$5 trillion economy is the world's third largest. The country lost its No. 2 place to China in 2010. The Japanese economy has been limping along for two decades. Most analysts expect the economy to suffer in the short term but rebound when reconstruction begins.

Cost of damage:
Estimates are escalating.

March 23: The government says the cost of the earthquake and tsunami could reach 25 trillion yen (US$309 billion). This would make it the most expensive natural disaster in the world.  Losses from damage to housing, roads, utilities and businesses in seven prefectures (states) are estimated at between 16 trillion yen (US$198 billion) and 25 trillion yen (US$309 billion), according to a Cabinet Office estimate. This could drag the economic growth rate down by 0.5 percent in 2011. The estimates do not include the impact of the nuclear crisis (to lost economic activity due to power shortages, damage to Fukushima nuclear plant, effects on stock markets,  tourism, food industry), so the final figure could be even higher.

March 19: Economics Minster Kaoru Yosano said the economic damage was more than 20 trillion yen (US$248 billion) - his estimate of the total economic impact of the 1995 earthquake in Kobe. Analysts earlier warned of 2 quarters of contraction. The reconstruction costs will likely be Japan's biggest since World War II.

Stock market: The Nikkei stock market nosedived 10.6 percent on March 15. It tumbled 6.2 percent on March 14, when markets opened after the quake. The two-day crash wiped about US$620 billion off the market. The Bank of Japan injected a record US$183.8 billion into the economy on March 14 to maintain liquidity, and pumped in another US$100 billion on Tuesday.

Foreign stock markets have also been affected by the deteriorating nuclear situation in Japan.

Public debt: The size of any emergency budget for relief and reconstruction could be constrained by the country's huge public debt, already the world's biggest. The Finance Ministry said in January that the government debt will increase 5.8 per cent to a record 997.7 trillion yen (US$11.8 trillion).The debt is set to reach 210 per cent of GDP in 2012, compared with an estimated 101 per cent for the U.S. Japan spent about 3 trillion yen after the Kobe earthquake of 1995, which caused about US$100 billion in damage.

GDP/Output: The 9.0-magnitude quake devastated areas of the north-east including Sendai in Miyagi prefecture, a city of one million about 300 km north of Tokyo and political/economic centre of Tohoku region. Tohoku accounts for about 8 per cent of GDP and is home to factories and energy infrastructure including the Fukushima nuclear power plant that is at risk of a total meltdown after several explosions.

Industries in northern Japan were forced to shut down facilities due to widespread power outages. Supply of parts to manufacturing plants have also been affected because of disrupted rail services and damaged infrastructure. Companies affected include:
* Sony - Japan's biggest exporter of consumer electronics. 10 factories and 2 research centres closed
* Toyota Motor - world's largest automaker. (March 23 update) Auto production stopped since March 14 because of difficulty securing components, including rubber parts and electronics. By March 27, its lost production will be 140,000 cars. Company said March 23 it would delay the April launch of the Prius hybrid minivan in Japan because the disaster had crippled parts suppliers and destroyed shops. It initially said it would close 12 factories until March 16, reducing output by 40,000 vehicles. Toyota could lose 6 billion yen in profit from stopping production for 1 day, according to Goldman Sachs analysts.
* Honda Motor, Nissan Motor, beermaker Sapporo Holdings and refiner JX Nippon Oil and Energy.
* Cosmo Oil - A refinery in Chiba, outside Tokyo, caught fire.
* Tokyo Electric Power is fighting  to prevent a total meltdown at its Fukushima nuclear power station after cooling systems failed.
* At least 6 seaports handling international trade sustained major damage from the quake. Most will be out of operation for months.

Factory shutdowns, power cuts and the damage to consumer confidence may hurt Japan's GDP for months, but later contribute to growth as rebuilding occurs, economists said.

POWER: The March 11 earthquake and tsunami reduced national power generating capacity by about 8 percent. Lack of power and water hinder recovery and factory operations. Japan's nuclear industry provides about one-third of the country's power needs. After the quake, 11 of the country's roughly 50 nuclear plants stopped producing power. On March 14, Tokyo Electric Power started cutting power supply through its first-ever rolling blackout to prevent any sudden power supply disruption. It hopes to end the blackouts by the end of April. The blackout will affect 3 million customers, including large factories, buildings and households.

YEN: Another risk is the potential strengthening of the yen, which is already hovering near a 16-year high against the US dollar, threatening the profits of exporters, one of the key pillars of the Japanese economy.

FOOD EXPORTS: The nuclear crisis is having a detrimental effect on food exports. Radiation leaks from the Fukushim plant has contaminated tap water and farm produce in the region, leading the countries in Asia, as well as United States, European Union and China banning the import of some Japanese food. Japan exported 481 billion yen of food last year, accounting for 0.7 percent of total exports, government figures show. In 2009, more than 70 percent of Japan’s food exports went to Hong Kong, the US, China, Taiwan and South Korea, according to the Japan External Trade Organization.

As of late March 26, some 99 products, including milk and vegetables, had been found to be contaminated in Tokyo and five prefectures to its north and east, according to the Health Ministry.

A comparison: Damage caused by Kobe earthquake, 1995
A 6.8-magnitude temblor struck the western city of Kobe on Jan. 17, 1995, killing 6,400 people and causing damage estimated at 10 trillion yen, or 2 percent of Japan’s GDP. The yen rose sharply in the wake of the Kobe earthquake as corporations repatriated funds to cope with the disaster. The importance of Kobe’s container port, then the world’s sixth-largest, and the city’s location between Osaka and western Japan made it more significant for the economy.

A comparison: Damage caused by Hurricane Katrina, 2005
The 2005 megastorm that devastated New Orleans in Louisiana, USA, and the surrounding region cost US$125 billion, according to the Insurance Information Institute.

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related posts
* FACTS: Japan earthquake, tsunami, nuclear crisis March 2011
* Damage caused by Japan earthquake, tsunami, nuclear crisis 2011
* Japan earthquake, tsunami: How to help
* facts on earthquakes
* facts on tsunamis
* facts on nuclear disasters

Sources for the full post on facts about the Japan earthquake, tsunami, nuclear crisis March 2011: Washington Post, CNN, Bloomberg, Ottawa Citizen, National Geographic, Reuters, BBC, buzzle, Wikipedia, USGS, Scolastic
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Related links

Buy 2:46: Aftershocks: Stories from the Japan Earthquake: 100% of procceds go to the Japanese Red Cross Society
Google Person Finder 2011 Japan Earthquake (you can use this to locate or provide info about a victim)
Volunteer interpreters (Japan Association of Translators) 
Donate with PayPal: Japan earthquake and tsunami relief
Yahoo! link to where you can donate: Japan earthquake and tsunami: How to help
Japan earthquake tsunami: How to help ~ liberal sprinkles (links to resources, places to donate, raffles and giveaways)

How to protect yourself in an earthquake and emergency numbers for Japan (in 24 languages)
72 hour emergency preparedness kit DIY (Tipnut)

Earthquake in Japan (The Atlantic)
Epic waves, earthquake shock Japan (National Geographic)

BBC Japan earthquake portal 
Timeline on Japan's unfolding nuclear crisis (Reuters)
Updates on the earthquake and tsunami in Japan (The Lede, NY Times)  lots of videos, also of tsunami hitting US
video: Japan tsunami engulfs everything in its path (Daily Telegraph)
Magnitude 8.9 Near the East Coast of Japan, USGS podcast 
10-year-old girl Tilly Smith saves 100 tourists from 2004 tsunami at Thai beach (Daily Telegraph)
Japan markets and economy after Kobe earthquake (Reuters)
Advanced economies at advantage in disaster (Reuters via The Montreal Gazette)

facts, info, videos on tsunamis (National Geographic)
USGS earthquake FAQ
earthquake and tsunami facts (MCEER, SUNY Buffalo)seismicity in Japan (wikipedia)
for kids
Fema for kids: tsunamis
(USGS) Earthquake for kids
Geology - Plate tectonics (Yahoo! kids)
Talking to your child about the earthquake in Japan ( Kid's doctor)


Anonymous said...

Great site. A lot of useful information here. I’m sending it to some friends!

ammara said...

this site proved very useful for me, thanks :)

Mikz32 said...

i am using this for a current event paper for my english class, just letting you know this information was very useful since my paper has to do with japan's tsunami and how it is affecting americas economy.. no worries, no plagiarizing either, i will give you all credit. the main purpose of my paper is for in text citation practice anyway, so i will be putting a lot of kudos to you :) THANK YOU 

liberal sprinkles said...

Thanks, Mikz32. I don't expect to be credited for facts, but I do ask that my work and the way the text is organized, not be copied and pasted elsewhere. Thanks and best wishes!

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Anonymous said...

This has helped me understand the economic impact to Japan after the disaster very well. You have honestly helped a lot! Cheers.

auralove899 said...

Thanks! Geography assessment homework :C

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