The World Bank on Monday issued a report saying the damage from Japan’s earthquake and tsunami could amount to as much as $235 billion and that limited effects from the disaster will be felt in economies across East Asia.
Rebuilding in the aftermath of the destruction could take five years, according to the report, released Monday in Singapore. Growth in Japan’s gross domestic product could be slowed by as much as half a percentage point this year, though it is likely to pick up after midyear once reconstruction efforts accelerate, the organization forecasted in its East Asia and Pacific Economic Update.
World Bank economist Vikram Nehru said the economic fallout would certainly be felt around the region, given Japan’s part in East Asia’s economy, but that it would be “short-lived.”
“In the immediate future the biggest impact will be in terms of trade and finance. We expect growth in Japan will pick up as reconstruction efforts accelerate,” Nehru said, according to a World Bank news release.
Using the 1995 Kobe earthquake as a barometer, the organization estimated that the damages would be in the range of $122 billion to $235 billion. After the Kobe quake, which was a magnitude 6.9 and caused about $100 billion in destruction, Japanese trade rebounded within a year, with imports recovering fully and exports back to 85% of normal levels, according to the report.
This month’s 9.0 earthquake has already disrupted production networks, particularly in the automotive and electronic sectors where Japan is a major producer of parts and components, and is a supplier of capital goods, the organization said in its report.
Thai carmakers have estimated they will run out of components imported from Japan by April and Korean electronics firms are seeing higher prices for memory chips, according to the report. China and the Philippines have economies closely tied to Japan’s and will be more heavily affected, the World Bank said.