The government estimated Wednesday the economic impact from the March 11 earthquake and tsunami in seven affected prefectures to cost up to ¥25 trillion ($309 billion) — an amount almost four times that of Hurricane Katrina in the U.S.
The government also warned that recoveries in the export and industrial sectors could halt due to the disaster.
The destruction of social infrastructure, housing and corporate facilities in the areas could cost between ¥16 trillion and ¥25 trillion, according to the Cabinet Office. This could push the nation’s economic growth rate lower by 0.5 percent.
The actual result may be worse as this projection ruled out any negative effects of power supply shortages spawned by the nuclear plant crisis in Fukushima Prefecture, or damages from the nuclear emergency itself.
But the Cabinet Office also suggested that downward pressure on the economy could be offset by reconstruction work, which normally brings about a surge in domestic demand.
The estimate covered Iwate, Miyagi, Fukushima, Hokkaido, Aomori, Ibaraki and Chiba prefectures. The figure compared with the ¥9.6 trillion cost of the 1995 Great Hanshin Earthquake, which pummeled Kobe and its environs.
In a separately released report, the government maintained its basic economic assessment for the country as a whole, while expressing its concerns about negative fallout from the disasters.
“Although the Japanese economy is turning to pick up, it is only weakly self-sustaining and the influence of the Tohoku-Pacific Ocean Earthquake is worrying.” the monthly report said.
Bank of Japan board member Ryuzo Miyao said the same day it may take more time to overcome the damage of the recent disasters than it did after the 1995 Kobe temblor.
“The ability to depress economic activity from the supply side is larger than the great Kobe earthquake and we must bear in mind that these effects could linger for some time,” Miyao said in a speech in Oita Prefecture. “The short-term effects are not insignificant.”
The U.S. National Hurricane Center in August 2006 calculated the damage of Hurricane Katrina, which slammed into New Orleans the year before, at $81 billion.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.