Quake, tsunami to cost Japan economy $100 bn: DBS

Wednesday, 16 March 2011 00:01 -     - {{hitsCtrl.values.hits}}

SINGAPORE, (AFP) -The massive earthquake and tsunami that struck Japan last week will cost its economy about $100 billion, Singapore's DBS Bank estimated Tuesday.

The sum is about two percentage points of Japan's annual gross domestic product (GDP), said David Carbon, the bank's managing director for economic and currency research.

Japan's nominal GDP, the value of goods and services produced in a year without accounting for inflation, was about $5.47 trillion in 2010, according to government figures released in February.

“So far the impact looks like they are going to be about $100 billion, which equates to about two percentage points of GDP,” Carbon said at a media briefing.

“It's very early days but the estimate right now is going to be slightly less in terms of dollars or yen as a percentage of GDP than the Kobe 1995 earthquake,” he said.

“These are damage estimates to existing property, and GDP doesn't measure existing property... so even though you have a big loss to the economy, you haven't had a big 'loss' to GDP,” Carbon noted.

“In fact, GDP tends to kick up following a disaster like this,” he said, adding this is due largely to the rebuilding and reconstruction of damaged infrastructure.

Damage to the economy from the 1995 Kobe earthquake was estimated at about $103 billion.

Japan's government had said Sunday it expected a “considerable” economic impact from the massive 9.0-magnitude earthquake and consequent tsunami that lashed the country's northeast coast last Friday.

The twin natural disasters have also damaged a nuclear plant, triggering an atomic emergency that authorities are struggling to contain.

Prime Minister Naoto Kan said the crisis was the country's gravest since the end of World War II.

The Bank of Japan (BoJ) on Tuesday pumped eight trillion yen ($98 billion) into the financial system to soothe money markets shaken by the disaster, after injecting a record 15 trillion yen on Monday.