Cost for Japan Quake seen up to $200 billion

11:58 AM billion, Japan, Quake No Comments

TOKYO - Japan's devastating earthquake and deepening nuclear crisis could lead to losses of up to $200 billion for the third-largest economy in the world, however, the global impact remains difficult to assess smash five days after a massive tsunami in the North-East Coast.

As Japanese officials, encrypted to 240 km (150 miles) North of the capital Tokyo avert a catastrophic meltdown of a nuclear power plant, assessment of the damage to buildings, production and consumer activity moved economists.

The disaster is expected, to Japanese Edition strongly in the coming months beat, but economists warned that it could lead to a deeper slowdown, if makes deficiency prove significant and persistent, delay, or even the "V shaped" recovery, that the earthquake of Kobe 1995 followed scotching.

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Most believe that the direct economic results between 10-16 trillion yen ($ 5.125$ 200 billion), which is total to a decline in gross domestic product (GDP) in the second quarter, but a sharp rebound in the second half of 2011 as reconstruction investment growth increases.

"The economic costs of the disaster will be great," said economists at JP Morgan. "There are significant loss to economic resources and economic activity damage (such as power outages) will be hampered by infrastructure in the weeks or months."

Their suffered Japanese shares worst two-day rout since the crash in 1987 on Monday and Tuesday, a whopping $ 626 billion lose value before 5.7 percent recovered fell on Wednesday as hedge funds to cover short positions.

But traders remained shy, influenced by each of the new development of the affected Fukushima and warning sign was substantial foreign assets to sell and funds to cover the costs of the nuclear crisis Japanese companies and insurers, Quake and tsunami to repatriate.

High-yield bonds and U.S. treasuries of health care jobs top the list of endangered assets the triple disaster of earthquake, tsunami and nuclear breakdown prompt Japanese investors to overseas funds should say back home, analysts.

Although the damage to the infrastructure is more difficult, some of the biggest risks for the economy can dating indirect market effects of the disaster, such as a rise in the yen.

The yen Fund rose to an all-time high against the dollar after the Kobe earthquake in 1995 during Japanese companies home drawn. The dollar has 3 percent against the yen since the disaster and is now close to the low pressures you to Kobe.

The direction of the yen would have a major impact on Japanese automakers such as Toyota Motor Co., Nissan Motor and Honda Motor, that between 22 and 38 percent of their cars at home build.

HSBC Chief Economist Stephen King said it was too early, put numbers on the economic cost, since the scale of the disaster was not yet clear.

Area of the Japan produces about 4.1% of GDP of the country affected by the tsunami, he said suggesting that first round economic impact could be limited. But the fate of the Fukushima nuclear reactors Japan can have not felt still unclear, the full force of the disaster still.

"At this time, it is too early to come up with reasonable estimates of the overall impact of the terrible events in Japan," wrote note King in a research.

He noted "knee-jerk economic and reactions to shocks and disasters often wide of the mark fall," on faulty predictions a US recession following the attacks of September 11, 2001 and a hit from the Asian tsunami in 2004.

The disaster is already by the global production chain, technology companies as output particularly hard meets Japan accounts for one-fifth of the worldwide semiconductor disturbed.

However, the Fed made no mention of Japan in a statement given the high degree of uncertainty about the global economic impact of the disaster, after its policy meeting on Tuesday.

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The European Central Bank, which earlier this month that it could hike prices in April, also appears warned, in wait-and-see mode as financial markets reduce their expectations for the tightening of monetary policy this year.

Fitch Ratings said that it justifies currently view action, the economic effects as sufficiently serious negative rating on Japan's well diversified economy and sovereign finance show flexibility.

The size of its $5.3 trillion is debt of Japan's economy, the highest proportion of all major developed countries in the world twice. But in contrast to other highly owed countries as Greece, only five percent debt is held of Japan by the foreign investors, so the risks of a financial crisis are limited.

Still, said in a sign that the European Heads of State and Government nervous may it a meeting of G7 Finance Ministers and central bankers to deal with the crisis, had called on their dissemination to Japan debt crisis after the disaster, France, where possible purchases of Japanese debt.

Credit rating agency of Moody's warned earlier this week, that she quake, tsunami and resulting nuclear crisis increased confidence in Japan's finances to lose the chance of investors and eventually calls for higher rates on government bonds.

Now the Government is using 200 billion yen in the emergency reserves to pay for anti-crisis efforts. The fast-developing disaster has prevented that Government officials from working on an emergency could be budget in the range of 5-10 trillion yen.

Some ruling party legislators have to pay a special tax proposed for disaster relief, but Finance Minister Yoshihiko Noda allies said that he is considering not tax increases.

In a bid, reassure investors who not uncontrolled spin be fiscal conditions, Japan has limited sales at 44 trillion yen in the last years new bond, but this ceiling should now be scrapped.

"Basically, the Government must cap, scrap the 44 trillion yen", said Seiji Adachi, an economist at Deutsche securities in Tokyo. "It is an emergency necessary budget as soon as possible, at least in the next one to two months to compile."

Large fund injections of the Bank of Japan keep as far as borrowing costs low and there are no signs of strains in Japan's financial system.

Sources said Reuters, which probably was last purchases the Central Bank, which makes it easy monetary policy by a doubling of funds for asset to 10 trillion yen on Monday, further steps as soon as next month.

Copyright 2011 Thomson Reuters.