Country could take five years to rebuild
The cost of damage caused by Japan’s 11 March earthquake could reach $235bn, according to the World Bank.
The institution estimated that the earthquake and tsunami could cost between $123bn and $235bn and take the country five years to rebuild.
Slowdown to GDP will be temporary, the Bank argued in a report, and reconstruction should spur growth later in the year.
Vikram Nehru, World Bank Chief Economist for the East Asia and Pacific region said: “Clearly given Japan’s importance in East Asia, the tragic events unfolding will be felt in the region. But it’s far too early to give an accurate assessment of the likely damages.”
“At this stage, we expect the economic impact of this disaster on the East Asian region to be fairly 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.”
Taking the 1995 Kobe earthquake as a guide, Japan’s trade slowed only for a few quarters, explained the report. However widespread disruption to manufacturing, communications and transport could create considerable challenges.
The study also added that as a quarter of East Asia’s long-term debt is denominated in yen, a one percent appreciation in the Japanese yen would translate into about a $250m increase in annual debt servicing on yen-denominated assets held by East Asia’s developing nations.