Japan quake could cost $308 billion
Japan disaster likely to be world's costliest
March 23, 2011
Tokyo -- Japan's government said the cost of the earthquake and tsunami that devastated the northeast could reach $309 billion, making it the world's most expensive natural disaster on record.
The extensive damage to housing, roads, utilities and businesses across seven prefectures has resulted in direct losses of between 16 trillion yen ($198 billion) and 25 trillion yen ($309 billion), according to a Cabinet Office estimate Wednesday.
The losses figure is considerably higher than other estimates. The World Bank on Monday said damage might reach $235 billion. Investment bank Goldman Sachs had estimated quake damage would be as much as $200 billion.
If the government's projection
proves correct, it would top the losses from Hurricane Katrina
. The 2005 megastorm that ravaged
"The aftermath of the tragic
The Cabinet Office suggested, however, that the economic hit could be softened by the expected upswing in public works and construction as the region rebuilds.
The 9.0-magnitude quake and
tsunami on March 11 laid waste to
Utilities have imposed power rationing, many factories remain closed and key rail lines are impassable.
Toyota Motor Corp., the world's No. 1 automaker, has halted auto production since March 14 because of difficulty securing components, including rubber parts and electronics. By Sunday its lost production will reach 140,000 cars.
The company said Wednesday it will
delay the launch of the Prius hybrid minivan in
Another Cabinet Office economic
report released Wednesday underscored the new challenges facing
"The economy is moving toward recovery, but its self-sustainability is weak," it said.
More broadly, the Japanese economy
has been lackluster for two decades, barely managing to eke out weak growth
between slowdowns. It lost its position as world's No. 2 economy to
The government plans to introduce a supplementary budget to tackle reconstruction, though Cabinet members have said additional budgets will probably be needed down the road.
Speaking to the upper house budget committee Tuesday, Finance Minister Yoshihiko Noda said the country's deteriorating public finances will not deter the government from reconstruction spending, according to Kyodo news agency.
Cabinet Office spokesman Noriyuki Shikata expressed confidence that the country could handle the massive task that lies ahead.
"This is not something that the Japanese economy cannot overcome," he told reporters Wednesday.
The government also reportedly
plans to inject public money into banks to help support lending as companies
rebuild. It may finance that from a fund of 11 trillion yen ($135 billion) that
is still available under a law on emergency support to banks passed after the
2008 collapse of Lehman Brothers.
Click here to return to FBIC homepage